After earning an MBA, a student begins working on an $80,000 per year job on 9/1/18. She expects to receive a 5 percent raise each year until she retires on 9/1/48. If the cost of capital (i.e. interest rate she uses to discount future earnings to current dollars) is 8% per year and she is paid monthly, determine the total present value of her before tax earnings. Assume she is paid at the end of each month and each annual raise takes effect on Sept 1 each year. (answer is $1,521,144,67) In Excel functions

After earning an MBA, a student begins working on an $80,000 per year job on 9/1/18. She expects to receive a 5 percent raise each year until she retires on 9/1/48. If the cost of capital (i.e. interest rate she uses to discount future earnings to current dollars) is 8% per year and she is paid monthly, determine the total present value of her before tax earnings. Assume she is paid at the end of each month and each annual raise takes effect on Sept 1 each year. (answer is $1,521,144,67) In Excel functions

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 28P

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