Pension payout-what is the present value

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Reference no: EM131448324

Suppose that we are looking at a pension payout over a 70-year period. The first payment, made one year from now, will be $10,000. Every year thereafter, the payment will grow by 4 percent, so the payment in the second year will be $10,000×1.04 = $10,400. The payment in the third year will be $10,400 ×1.04 = $10,816 and so on. What’s the present value if the appropriate discount rate is 9 percent? If this pension pays for infinite period, what is the present value?

Reference no: EM131448324

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