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In exchange for a lump sum payment now, Binghamton Pension Plan offers an annual pension over thirty years beginning with a payment of $50,000 at
- In exchange for a lump sum payment now, Binghamton Pension Plan offers an annual pension over thirty years beginning with a payment of $50,000 at the start of the first year. There are thirty payments in total and the payments will increase at an annual rate of 3% per year. The appropriate opportunity cost of funds is 6% per year. What is the amount of lump sum needed today to purchase the pension?
- $1,015,054
- $1,016,054
- $1,018,054
- $1,019,054
- $1,020,054
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