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Jane is a sixty - year - old bank manager. She is now making $ 8 0 , 0 0 0 per year. Her bank
Jane is a sixtyyearold bank manager. She is now making $ per year. Her bank is not doing very well,
and she recently was asked by the head office whether she would consider an employment termination package.
If she leaves her job now, she will be paid a lumpsum compensation of $ Because of her age, she will
not be able to find another job. On the other hand, if she chooses to remain with the bank, she will have to
accept a pay cut of starting immediately. The growth rate of her salary is expected to be only pa until
she reaches her retirement age of sixtyfive. Suppose that the valuation rate is pa annual compounding.
Should she accept the termination package?
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