. You are able to choose between two retirement policies described below. Policy A: Starting 35 years from now, you will receive equal annual payments of $10,000 for 10 years. Policy B: Thirty-five years from now, you will receive one lump-sum payment of $100,000. Which will you choose? Assume the rate of interest is 6 percent.

Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
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Publisher:Weil
ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications
Section: Chapter Questions
Problem 14E
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19. You are able to choose between two retirement policies described below.
Policy A: Starting 35 years from now, you will receive equal annual payments of $10,000 for 10 years.
Policy B: Thirty-five years from now, you will receive one lump-sum payment of $100,000.
Which will you choose? Assume the rate of interest is 6 percent.

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