Jane is a sixty-year-old bank manager. She is now making $80,000 per year.Her bank is not doing
Question:
Jane is a sixty-year-old bank manager. She is now making $80,000 per year.Her bank is not doing verywell, and she recently was asked by the head office whether she would consider an employment termination package. If she leaves her job now, she will be paid a lump-sum compensation of $300,000. Because of her age, she will not be able to find another job. On the other hand, if she chooses to remain with the bank, she will have to accept a pay cut of 25%, starting immediately. The growth rate of her salary is expected to be only 1% p.a. until she reaches her retirement age of sixty-five. Suppose that the valuation rate is 3% p.a., annual compounding. Should she accept the termination package?
Step by Step Answer:
Strategic Financial Planning Over The Lifecycle A Conceptual Approach To Personal Risk Management
ISBN: 9780521148030
1st Edition
Authors: Narat Charupat, Huaxiong Huang, Moshe A. Milevsky