What is the present value of this donation

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Reference no: EM131049718

1. Assume that you are 30 years old today, and that you are planning on retirement at age 65. Your current salary is $42,000 and you expect your salary to increase at a rate of 5% per year as long as you work. To save for your retirement, you plan on making annual contributions to a retirement account. Your first contribution will be made on your 31st birthday and will be 8% of this year's salary. You expect to deposit 8% of your salary each year until you reach age 65. Assume that the rate of interest is 9%.

The present value (PV) (at age 30) of your retirement savings is ________.

2. A rich donor gives a hospital $1,040,000 one year from today. Each year after that, the hospital will receive a payment 6% larger than the previous payment, with the last payment occurring in ten years' time.

What is the present value (PV) of this donation, given that the interest rate is 11%?

3. If the current rate of interest is 8%, then the present value (PV) of an investment that pays $1200 per year and lasts 24 years is closest to ________.

Reference no: EM131049718

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