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All computations must be done and shown how to do it on a financial calculator.  Timothy is retiring from his job soon at which time his employer will make the following offer: A lump sum amount of $200,000 A sum of $15,000 at the beginning of each month for the next 25 years.  If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose?

All computations must be done and shown how to do it on a financial calculator.  Timothy is retiring from his job soon at which time his employer will make the following offer: A lump sum amount of $200,000 A sum of $15,000 at the beginning of each month for the next 25 years.  If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 39P
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All computations must be done and shown how to do it on a financial calculator. 

Timothy is retiring from his job soon at which time his employer will make the following offer:

  1. A lump sum amount of $200,000
  2. A sum of $15,000 at the beginning of each month for the next 25 years.

 If the average interest rate is likely to be 5.5% p.a. for the next 25 years, which option should Timothy choose?

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