Shuai is 40 years old and has been asked to accept early retirement from his company. The company offered Shuai three alternative compensation packages to induce Shuai to retire:

1. $251,000 cash payment to be paid immediately.
2. A 20-year annuity of $23,000 beginning immediately.
3. A 10-year annuity of $72,000 beginning on July 1 of the year Shuai reaches age 50 (after 10 years).

Required:

Determine the present value of each alternative, assuming that Shuai is able to invest funds at a 7% rate. Which alternative should he choose?

Note: Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)

Alternative	PV
1	251,000
2
3
Shuai should choose	Alternative 3