Jule has just retired. Her company\'s retirement program has two options as to h
ID: 2452449 • Letter: J
Question
Jule 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 S 133.000 immediately as her full retirement benefit Under the second option, she would receive $16,000 each year for seven years plus a lump-sum payment of $52,000 at the end of the seven-year period. Cfcck here to view Exhibit 11B-1 and Exhibit 11B-2. to determine the appropriate discount factors) using tables Calculate the present value for the following assuming that the money can be invested at 12% (Use the appropriate table to determine the discount factors).) If you can invest money at a 12% return, which option would you prefer?Explanation / Answer
Calculation of Present Value 0.892857 0.797194 Option I 0.71178 0.635518 Present Value = Cash Flow 0.567427 Present Value = 133000 0.506631 0.452349 Option II Present Value = 16000*4.56+52000*.452 = 72960+23504 Present Value 96464 Option I is better due to high present Value
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