Assume that Social Security promises you $40,000 per year starting when you retire 45 years from today

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Assume that Social Security promises you $40,000 per year starting when you retire 45 years from today (the first $40,000 will be paid 45 years from now). If your discount rate is 7%, compounded annually, and you plan to live for 15 years after retiring (so that you will receive a total of 16 payments including the first one), what is the value today of Social Security’s promise? (See MyFinanceLab for the data in Excel Format.)

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Corporate Finance

ISBN: 9780273792024

3rd Global Edition

Authors: Peter Demarzo, Jonathan Berk

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