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Help with Financial Management

Algebra
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Suppose that an insurance agent offers you a policy that will provide you with a yearly income of $40,000 in 30 years. What is the comparable salary today, assuming an inflation rate of 3% compounded annually? (Round your answer to the nearest cent.)

Nov 13th, 2014

Finite Math to the rescue!!! 

1) A = Pe^rt ==> 225 500 = Pe^(.0825 * 8.42466) = P * 2.00378 ==> P = 112 537.43 

2) 60 000 = P(1.05)^30 = P * 4.32194 ==> P = 13 882.65 

3) 650 000 = R [(1 - (1+i)^-n)/i] where i = .1050/12 and n = 360; 650 000 = R * 109.32077; 
R = 5945.81

Nov 13th, 2014

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Nov 13th, 2014
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Nov 13th, 2014
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