You must show your work for credit. Simply giving the final answer is not sufficient; you must explain and show how you arrived at each answer. Ignore all taxes in your work.

After working for 20 years with your company, you have decided to accept the companys early retirement offer. They are giving you a choice of either $24,000 per year for 25 years (with the first payment occurring one year from today) or a lump sum of $374,928 one year from today.

1. If you can earn 7% per year on other investments, will you accept this lump sum or take the annuity payments? Show the calculations used to decide between the options and justify your answer.
2. Assume that the company believes that these two options are of equal value. What interest rate is the company using in its calculations?