After completing a long and successful career as senior vice president for a large bank, you are preparing for retirement. After visiting the human resources office, you have found that you have several retirement options to choose from:

a.	An immediate cash payment of $1.18 million.
b.	Payment of $68,000 per year for life.
c.	Payment of $58,000 per year for 4 years and then $78,000 per year for life (this option is intended to give you some protection against inflation).

You believe you can earn 7 percent on your investments and your remaining life expectancy is 8 years.

Required:

1.

Calculate the net present value of each option. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Enter your answers in dollars but not in millions.)

	Net Present Value
Option A
Option B
Option C