Shuai is 55 years old and has been asked to accept early retirement from his company. The
Question:
Shuai is 55 years old and has been asked to accept early retirement from his company. The company has offered Shuai three alternative compensation packages to induce Shuai to retire.
1. $180,000 cash payment to be paid immediately
2. A 20-year annuity of $16,000 beginning immediately
3. A 10-year annuity of $50,000 beginning on July 1 of the year John reaches age 65 (after 10 years)
Required:
Determine the present value of each alternative, assuming that Shuai is able to invest funds at a 7% rate. Which alternative should he choose?
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Choose the alternative with the highest present value Alternative 1 PV 1...View the full answer
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