suppose that an insurance agent offers you a policy that will provide you with a yearly income of $60,000 in 30 years what is the comparable salary today, assuming inflation rate of 3% compounded annually. round the answer to the nearest cents.
Thank you have a day.
A = p(1 + r)^t
60000 =p(1.03)^30
60000 = 2.427262471p
P = $24719.21
thank you very much it is appreciated.
To find the comparable salary today, we need to adjust the future income of $60,000 for inflation.
We'll use the formula for compound interest to do this calculation:
Current Value = Future Value / (1 + Inflation Rate)^Number of Years
Let's plug in the values into the formula:
Future Value = $60,000
Inflation Rate = 3% = 0.03
Number of Years = 30
Current Value = $60,000 / (1 + 0.03)^30
Calculating this equation will give us the comparable salary today.
Current Value ≈ $60,000 / (1.03)^30
Now, let's calculate it step by step:
Step 1: Calculate (1.03)^30
(1.03)^30 ≈ 2.427
Step 2: Divide $60,000 by 2.427
Current Value ≈ $24,683.10
Therefore, the comparable salary today, adjusted for inflation, is approximately $24,683.10.