The Motley Fool Discussion Boards
Investing/Strategies / Retirement Investing
|Subject: Re: Pension figured into Networth???||Date: 10/15/1999 4:18 PM|
|Author: JAFO31||Number: 14584 of 83158|
JABoa: "I get the same number as GrayWulff. Just to be explicit (and the assumption is different from JAFO's which has declining payments), you want to calculate the principal which, invested at 6%, will produce an income stream of $45,000 a year for 30 years."
I guees I was not clear, I was not assuming declining payments but do very abbrievated present value calculations.
<<<<Assuming beginning of year payment, then first year alone is 45k present value, second year is roughly $42,450 present value [45,000 1 year from now is worth roughly 42,450 when discounted at 6%], and third year is roughly 40k present value for a 3 year total of 127,450 present value; the remaining 27 years must be worth more than $7,200 present value. Even assuming end of year payments, I doubt value would drop that low.
1st year 45k
2nd year 45,000/1.06
3rd year 45,000/1.06^2
etc. . . .
30th year 45,000/1.06^29>>>>
|Copyright 1996-2017 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|