Suppose that an insurance agent offers you a policy that will provide you with a yearly income of $30,000 in 30 years. What is the comparable salary today, assuming an inflation rate of 3% compounded annually? (Round your answer to the nearest cent.)

2 answers

PV = FV / (1 + r)^n
= 30000/(1.03)^30
= $12,359.60
Suppose that an insurance agent offers you a policy that will provide you with a yearly income of $50,000 in 30 years. What is the comparable salary today, assuming an inflation rate of 3% compounded annually?