You are 50 years old, having a long experience in finance, you landed a job at ENBD. Your salary is AED500,000 per year, and your contract is for 5 years. Your salary will stay the same during the 5 years and, since you are working in UAE, you are not subject to taxes. If you do well (which we assume will happen with certainty), you will get a contract renewal for 5 years. Under this contract, your salary will grow at the rate of 4% per year, until retirement at 60 years old.

salaries are paid at the end of each year.

Year

Salaries

1

500,000

2

500,000

3

500,000

4

500,000

5

500,000

6

500,000(1+4%)

..

.

...

..

10

...

1. Assuming an interest rate equal to 5%, calculate your human capital value during this period of all your future earnings? (the PV as of today)(1.5 Marks)

2. Assume that you spend 70% of your salary, and deposit the remainder in a savings account, which pays the rate of 5%. Estimate how much money will you have in the savings account just after you received your fifth salary. (end of year 5). (1.5 Marks)

You are 50 years old, having a long experience in fronce, you landed a job at ENBD Your salary is E0600.000 per year, and your contract is for years. Your aloy will stay the same during to 5 years and tince you are working in ME, you meno subject to thes. If you do well which we asume willpoon with coctomy you will got a contraronowo-yeart. Under this contact your wory wit grow at the rate of 2% per year, anti fotrement at 60 years old. waves are paid at the end.tocheat Year 2 12 4 Stories 500,000 500,000 500,000 300,000 500,000 100,000(1+0%) 0 10 Awing an interest rate equat, cate your cataludur your futures the bodo 2. As the 70% of your salary ani de romance why wil in the wings out into your receved your owy fond of years) (15 M