What is the value today

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Question - Assume that your superannuation fund promises you a pension of $43000 per year starting on the day you retire 44 years from now (i.e. you will receive the first $$43000 payment exactly 44 years from today). Assume that the appropriate discount rate for these payments is 5.0% p.a. compounded annually and that you plan to live for 17 years after retiring, such that you will receive a total of 18 payments (this includes the first payment).

Required - What is the value today (at t=0) of the superannuation fund's promise given the above assumptions?

Reference no: EM132859833

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