Answer:
Present Value= $28,935.66
Explanation:
Giving the following information:
Assume you work for an employer who will contribute $60 a week for the next 20 years into a retirement plan for your benefit. The discount rate is 9 percent.
First, we need to calculate the final value using the following formula:
FV= {A*[(1+i)^n-1]}/i
A= weekly deposit= 60
n= 20*52= 1,040
i=0.09/52=0.00173
FV= {60*[(1.00173^1040)-1]}/0.00173= $174,638.85
Now, we can calculate the present value:
PV= FV/(1+i)^n
PV= 174,638.85/ (1.00173)^1040= $28,935.66
