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 $125,000 immediately as her full retirement benefit. Under the second option, she would receive $12,000 each year for eleven years plus a lump-sum payment of $51,000 at the end of the eleven-year period.

1a. Calculate the present value for the following assuming that the money can be invested at 6%

Present Value of First Option
	Cash Flow		Discount Factor	=	Present Value
Lump-sum payment
Present Value of Second Option
	Cash Flow		Discount Factor	=	Present Value
Annual annuity
Lump-sum payment
Total present value

2. If you can invest money at a 6% return, which option would you prefer?