Question

John Roberts is 54 years old and has been asked to accept early retirement from his company. On July 1, the company offered John three alternative compensation packages to induce John to retire: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. $185,000 cash payment to be paid immediately. 2. A 19-year annuity of $17,000 beginning immediately. 3. A 10-year annuity of $55,000 beginning on July 1 of the year John reaches age 64 (after 10 years). Required: Determine the present value, assuming that he is able to invest funds at a 7% rate, which alternative should John choose

Answer 1

Answer:

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