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Question: (a) You belong to an unusual pension plan because your retirement payments will continue forever (and will go to your descendants after you die). If you will receive $60,000 per year at the end of each year starting 40 years from now (i.e., the first payment is in time 40), what is the present value of your retirement plan if the discount rate is 4%?

(b) How does your answer change if you receive $5,000 per month every month forever (in perpetuity) starting 40 years from today (in monthly time period 480) and you compound monthly?

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Category:- Basic Finance
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