The present value of benefits (PVB) for each resident if there's an annual discount rate of 9% is $1477.
Increment in year 1 will be:
= $500 × (1 + 9%)
= $500 × 1.09
= $545
Increment in year 2 will be:
= $500 × (1 + 9%)²
= $594.05
Increment in year 3 will be:
= $500 × (1 + 9%)³
= $647.52
Therefore, the PVB nominal will be:
= 520/1.09 + 594.05/1.1881 + 647.52/1.295
= $477 + $500 + $500
= $1477
In conclusion, the present value if benefits is $1477.
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