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 found that you have several retirement options to choose from:

An immediate cash payment of $1 million.

Payment of $92,000 per year for life.

Payment of $82,000 per year for the first 10 years and then $95,000 per year for the remainder of your life (this option is intended to give you some protection against inflation).

You believe you can earn 8 percent on your investments, and your remaining life expectancy is 20 years.

Required:

Calculate the present value of each option. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.)

Determine which option you prefer.