Dorothy has just two more years of teaching energetic high school students before she can retire. A school district administrator approaches her about retiring early. If she were to accept the early retirement offer, she would receive a $70,000 payment paid immediately.

a)If Dorothys current salary is $40,000, the relevant interest rate is 7%, and Dorothy is *only* concerned with the monetary implications of this decision, what should she do?

b)If the relevant interest rate were actually 4%, how would this impact Dorothys assessment and decision? Explain what drives any differences.