Unusual pension plan

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Reference no: EM131962640

(a) You belong to an unusual pension plan because your retirement payments will continue forever (and will go to your descendants after you die). If you will receive $60,000 per year at the end of each year starting 50 years from now (i.e., the first payment is in time 50), what is the present value of your retirement plan if the discount rate is 4%?

(b) How does your answer change if you receive $5,000 per month every month forever (in perpetuity) starting 50 years from today (in monthly time period 600) and you compound monthly?

Reference no: EM131962640

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