Problema Solution
Suppose that an insurance agent offers you a policy that will provide you with a yearly income of $60,000 in 30 years. What is the comparable salary today, assuming an inflation rate of 6% compounded annually? (Round your answer to the nearest cent.)
Answer provided by our tutors
A = $30,000 is future value
r = 0.06 or 6%
t = 30 years
m = 12 number of compounding periods per year
i = r/m = 0.06/12 = 0.005 interest rate per period
n = 30*12 = 360 total number of compounding periods
-----------------------------
A = P(1 + i)^n
P = A / ((1 + i)^n)
P = 30,000 / ((1+ 0.005)^30)
P = $25,830.89 is the comparable salary today