Required; 1. Calculate the present value of each option. (Euture Value of $1. Present Value of $1. Euture Value Annuity of $1. Present Value Annuity of $3) 2. Determine which option you prefer

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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After completing a long and successful career as senior vice president for a large bank, you are preparing for retirement. After visiting
the human resources office, you found that you have several retirement options to choose from
a. An immediate cash payment of $112 million
b. Payment of $62,000 per year for life
c. Payment of $52,000 per year for the first 4 years and then $72,000 per year for the remainder of your life (this option is intended
to give you some protection against Inflation)
You believe you can earn 10 percent on your investments, and your remaining life expectancy is 8 years.
Required:
1. Calculate the present value of each option. Euture Values of $1. Present Value of $1. Euture Value Annuity of $1. Present Value
Annuity of $1)
2. Determine which option you prefer
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Calculate the present value of each option. (Future Value of $1, Present Value of $1, Future Value Annuity of $1.
Present Value Annuity of $1.)
Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Enter your answers in whole
dollars, not in millions. Round the final answer to nearest whole dollar.
Option A
Option B
Option C
$
s
$
Present Value
Answer is complete but not entirely correct.
626
565
000
62 3
Required 2 >
Show less&
Transcribed Image Text:After completing a long and successful career as senior vice president for a large bank, you are preparing for retirement. After visiting the human resources office, you found that you have several retirement options to choose from a. An immediate cash payment of $112 million b. Payment of $62,000 per year for life c. Payment of $52,000 per year for the first 4 years and then $72,000 per year for the remainder of your life (this option is intended to give you some protection against Inflation) You believe you can earn 10 percent on your investments, and your remaining life expectancy is 8 years. Required: 1. Calculate the present value of each option. Euture Values of $1. Present Value of $1. Euture Value Annuity of $1. Present Value Annuity of $1) 2. Determine which option you prefer Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the present value of each option. (Future Value of $1, Present Value of $1, Future Value Annuity of $1. Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Enter your answers in whole dollars, not in millions. Round the final answer to nearest whole dollar. Option A Option B Option C $ s $ Present Value Answer is complete but not entirely correct. 626 565 000 62 3 Required 2 > Show less&
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