As a result of a slowdown in operations, Tradewind Stores is offering employees who have been terminated

Question:

As a result of a slowdown in operations, Tradewind Stores is offering employees who have been terminated a severance package of $100,000 cash paid today; $50,000 to be paid in one year; and an annuity of $20,000 to be paid each year for 20 years. What is the present value of the package assuming an interest rate of 6 percent?

Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...