An employee retiring from a firm after 36 years of service at age 68 has earned a pension of $64,000 per year paid in quarterly payments of $16,000. His expected life expectancy is 18 years further at age 86. The pension payments would end when he dies. 1. Given a 12% discount rate based on the investment risk of his employer, what is the lump sum value of the pension when he retires? 2. If the employer offered the employee a lump sum payment of $420,000 instead of the pension that he could put into an annuity with the same risk as receiving his employer's pension paying 12% interest per year compounded quarterly, should he take it? 3. What risk would the retiring employee have if he does not accept the lump sum