Required: 1-a. Calculate the present value for the following assuming that the money can be invested at 12%. 1-b. If she can invest money at 12%, which option would you recommend that she accept?
Required: 1-a. Calculate the present value for the following assuming that the money can be invested at 12%. 1-b. If she can invest money at 12%, which option would you recommend that she accept?
Chapter3: Income Sources
Section: Chapter Questions
Problem 40P: Minnie owns a qualified annuity that cost 78,000. The annuity is to pay Minnie 650 per month for...
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Transcribed Image Text:Julie has just retired. Her company's retirement program has two options as to how retirement benefits can be received. Under the
first option, Julie would receive a lump sum of $134,000 immediately as her full retirement benefit. Under the second option, she
would receive $28,000 each year for 5 years plus a lump-sum payment of $53,000 at the end of the 5-year period.
Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables.
Required:
1-a. Calculate the present value for the following assuming that the money can be invested at 12%.
1-b. If she can invest money at 12%, which option would you recommend that she accept?
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Complete this question by entering your answers in the tabs below.
Req 1A
Req 1B
Calculate the present value for the following assuming that the money can be invested at 12%. (Round your final answer to
the nearest whole dollar amount.)
Option 1
Option 2
Present value
Req 1B >
134,000
< Req 1A
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