Present value of annuity

  • PVA=PMT x [(1-(1/(1+i)^n))/i]

    • PVA=Present value of an annuity

    • PMT payment or annuity amount

    • i=interest rate per period

    • n=number of periods

    • equation four

  • Example

    • want to be able to retire at 65 with an income stream of 100,000 a year for the next 20 years. you can also think you can earn a 5% return on your moneyduring retirement how much money will you need to save before you retire

    • let the compounding do the work so you dont ahve to save 2 million to withdraw 100,000 each year after retiring

      • PVA=$100,000 x [1-((1)/(1+0.05)^(20))/0.05)

      • PVA=100,000×12.462

      • PVA=1,246,200

    • 2. Future value of an annuity (a fixed sum of money that occurs

      annually)--Bob is 22 years old and he plans on retiring at age 62. If

      Bob deposits $5,000 every year for forty years into an investment

      (Most likely, his Roth IRA) that earns an annual rate of return of

      10%, how much will Bob have when he retires? Part B: Now, let’s

      look at his buddy, “Don” (He only invests from age 42 to age 62).

      How much will he have when he retires, assuming he earns the same

      annual rate and invests the same amount as Bob does each year?

      • 2,221,963

      • 286,375

  • www.bls.gov/ooh/

  • Career choice factors

    • requires planning

    • trade offs of career decisions

      • alternatives have risks and opportunity costs

      • career choices require evaluation to see if there is a better opportunity available

    • technical skills

      • specialized career training for a specific occupation

    • general skills

      • are traits adapatabe to most work situations

      • some can be acquired at school while others require experience

    • Personal factors

      • aptitudes

      • interests inventories

      • your personality

      • perform best in low preassure or high preassure working enviroments

      • Personal SWOT analysis

  • Employment search stratagies

    • obtaining employment experience

      • volunteer work, internships, part time employment, on campus opportunities

    • Benefits’

      • public sector

        • child care

        • leaves of absence

        • elder care

        • cafeteria style or flexible benefits

        • flexible spending and medical spending accounts

          • tax deductible

      • compare job benefits based on market value and future value

      • taxable equivelant value of a non taxable benefit

        • my firm just gave me a 1000 dollar laptop. i wont get taxed on this benefit, so what is the taxable equivelant value of the laptop its not 1000 dollars because i would have to earn more than 1000 to have enough leftover after taxes to go buy a 1000 dollar laptop lets assume in in the 28% income tax bracket, so how much would i have to earn in order to have 1000 leftover after taxes to buy a laptop

        • tax equivelant value of a nontaxable benefit= (value of benefit)/(1-t)

          • ex with laptop (1000)/(1-0.28) = 1389