Question
You are 56 years old and you had been planning to retire at the age of 66. Your employer makes you an early retirement offer
You are 56 years old and you had been planning to retire at the age of 66. Your employer makes you an early retirement offer that gives you a choice between $600,000 immediately or 10 end-of-the-year payments of $73,214. What interest rate (to the closest whole percent) over the next ten years would make the two offers essentially equivalent from a time value of money point of view? (Hint: This is an A=BxC problem. Set up your equation and then solve for the factor in the appropriate exhibit table. This will allow you to identify the correct interest rate.)
Group of answer choices
5%
3%
1%
2%
4%
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