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Item 1

Item 1 2 points

Julie has just retired. Her companys retirement program has two options as to how retirement benefits can be received. Under the first option, Julie would receive a lump sum of $129,000 immediately as her full retirement benefit. Under the second option, she would receive $18,000 each year for 6 years plus a lump-sum payment of $55,000 at the end of the 6-year period.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

1-a. Calculate the present value for the following assuming that the money can be invested at 12%.

1-b. If she can invest money at 12%, which option would you recommend that she accept?

Calculate the present value for the following assuming that the money can be invested at 12%. (Round your final answer to the nearest whole dollar amount.)

	Option 1	Option 2
Present value