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

Question:

As a result of a slowdown in operations, Mercantile Stores is offering employees who have been terminated a severance package of $100,000 cash, another $100,000 to be paid in one year, and an annuity of $30,000 to be paid each year for twenty years. What is the present value of the package, assuming an interest rate of 8 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,...

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