our mom is thinking of retiring. Her retirement plan will pay her either

$100,000

immediately on retirement or

$140,000

five years after the date of her retirement. Which alternative should she choose if the interest rate is:

a.

0%

per year?

b.

8%

per year?

c.

20%

per year?

Question content area bottom

Part 1

a.

0%

per year?

If the interest rate is

0%

per year, the PV of the amount to be received five years after retirement is

$enter your response here.

(Round to the nearest dollar.)

Part 2

Which alternative should your mom take in this case?(Select the best choice below.)

A.Take the money now.

Takethemoneynow.

B.Wait until 5 years after retirement.

Waituntil5yearsafterretirement.

Part 3

b.

8%

per year?

If the interest rate is

8%,

the PV of the amount to be received five years after retirement is

$enter your response here.

(Round to the nearest dollar.)

Part 4

Which alternative should your mom take in this case?(Select the best choice below.)

A.Take the money now.

Takethemoneynow.

B.Wait until 5 years after retirement.

Waituntil5yearsafterretirement.

Part 5

c.

20%

per year?

If the interest rate is

20%,

the PV of the amount to be received five years after retirement is

$enter your response here.

(Round to the nearest dollar.)

Part 6

Which alternative should your mom take in this case?(Select the best choice below.)

A.Take the money now.

Takethemoneynow.

B.Wait until 5 years after retirement.

Waituntil5yearsafterretirement.