Question

Your first job out of college will pay you $50,000 in year 1 (exactly one year from today), growing at a rate of 3.7% per year thereafter. You will also receive a one time bonus of $26,000 at the same time as your first salary. You plan to retire in 43 years (you'll receive 43 years of salary). If the applicable discount rate is 5%, what is the present value of these future earnings today? Round to the nearest cent.

Answer 1

PV of CFs = Sum [ CF * PVF(r%,n) ]

Year	CF	PVF @5%	Disc CF
1	$    76,000.00	0.9524	$      72,380.95
2	$    51,850.00	0.9070	$      47,029.48
3	$    53,768.45	0.8638	$      46,447.21
4	$    55,757.88	0.8227	$      45,872.15
5	$    57,820.92	0.7835	$      45,304.21
6	$    59,960.30	0.7462	$      44,743.30
7	$    62,178.83	0.7107	$      44,189.33
8	$    64,479.45	0.6768	$      43,642.23
9	$    66,865.19	0.6446	$      43,101.89
10	$    69,339.20	0.6139	$      42,568.25
11	$    71,904.75	0.5847	$      42,041.22
12	$    74,565.22	0.5568	$      41,520.71
13	$    77,324.14	0.5303	$      41,006.64
14	$    80,185.13	0.5051	$      40,498.94
15	$    83,151.98	0.4810	$      39,997.52
16	$    86,228.60	0.4581	$      39,502.32
17	$    89,419.06	0.4363	$      39,013.24
18	$    92,727.57	0.4155	$      38,530.22
19	$    96,158.49	0.3957	$      38,053.18
20	$    99,716.35	0.3769	$      37,582.04
21	$ 1,03,405.86	0.3589	$      37,116.74
22	$ 1,07,231.87	0.3418	$      36,657.20
23	$ 1,11,199.45	0.3256	$      36,203.35
24	$ 1,15,313.83	0.3101	$      35,755.12
25	$ 1,19,580.44	0.2953	$      35,312.44
26	$ 1,24,004.92	0.2812	$      34,875.23
27	$ 1,28,593.10	0.2678	$      34,443.45
28	$ 1,33,351.05	0.2551	$      34,017.00
29	$ 1,38,285.03	0.2429	$      33,595.84
30	$ 1,43,401.58	0.2314	$      33,179.89
31	$ 1,48,707.44	0.2204	$      32,769.09
32	$ 1,54,209.61	0.2099	$      32,363.38
33	$ 1,59,915.37	0.1999	$      31,962.69
34	$ 1,65,832.24	0.1904	$      31,566.96
35	$ 1,71,968.03	0.1813	$      31,176.13
36	$ 1,78,330.85	0.1727	$      30,790.14
37	$ 1,84,929.09	0.1644	$      30,408.93
38	$ 1,91,771.47	0.1566	$      30,032.44
39	$ 1,98,867.01	0.1491	$      29,660.61
40	$ 2,06,225.09	0.1420	$      29,293.38
41	$ 2,13,855.42	0.1353	$      28,930.70
42	$ 2,21,768.07	0.1288	$      28,572.51
43	$ 2,29,973.49	0.1227	$      28,218.76
PV of CFs			$ 16,19,927.04

PV of Future Earnings is $ 1,619,927.04