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Suppose when you turn 65, you will receive an annual pension (starting on your 65th birthday) of $60,000. You expect to collect 25 pension payments,
Suppose when you turn 65, you will receive an annual pension (starting on your 65th birthday) of $60,000. You expect to collect 25 pension payments, the last being on your 89th birthday. The discount rate is 8% per annum (I.e. similar investments pay 8% annually in nominal terms). What is the present value of your future pension, today on your 45th birthday? (But the payments wont start until you turn 65.)
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