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Darius Rucker is leaving Theta Tech after several years. During his time at Theta he accumulated a deferred payroll benefit. He must choose between a
Darius Rucker is leaving Theta Tech after several years. During his time at Theta he accumulated a deferred payroll benefit. He must choose between a lump-sum distribution or annual payments over the next 10 years, with his first payment deposited today. He believes he can invest any sum received at 5.15% for the next ten years. The annual payments are $12,500 and the lump-sum distribution is $105,000. To the nearest dollar, the more valuable choice is:
A. | The lump-sum distribution. | |
B. | The annual payments. | |
C. | Both choices have the same value. |
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