Assume you work for an employer who will contribute $60 a week for the next 20 years into a retirement plan for your benefit. At a discount rate of 9 percent, what is this employee benefit worth to you today?

Present Value = $28,935.66

Explanation:

Giving the following information:

Assume you work for an employer who will contribute $60 a week for the next 20 years into a retirement plan for your benefit. The discount rate is 9 percent.

First, we need to calculate the final value using the following formula:

FV = {A*[ (1+i) ^n-1]}/i

A = weekly deposit = 60

n = 20*52 = 1,040

i=0.09/52=0.00173

FV = {60*[ (1.00173^1040) - 1]}/0.00173 = $174,638.85

Now, we can calculate the present value:

PV = FV / (1+i) ^n

PV = 174,638.85 / (1.00173) ^1040 = $28,935.66