1) You are offered a contract with a signing bonus. If they offered you either $

Question

1) You are offered a contract with a signing bonus. If they offered you either $215,000 in cash or $2,000 a month for 15 years, guaranteed, which do you take (based strictly on the math)? Your safe rate of return is 7.5%.

In Excel Formula, Computer the value of the $2,000 a month here:

Which is greater? The lump sum or the cash flow?

2)

How do I solve this in excel?

Thank You!

You want to retire as a millionaire. How much do you need to put away each month if: You use common stocks and have an average return of 10%? You use corporate bonds and have an average return of 6%? You use government bonds and have an average return of 4%? You put your money in a CD at 3.5% interest rate? NOTE:   If you are over 45 use $100,000 instead of $1,000,000

Explanation / Answer

Ans

Option 1 Montly Payment        2,000.00 Yearly Interest rate 7.50% Monthly rate 0.00625 PFVAF .625% for a period of 180 Months 107.873427 Present value of cash flows 215746.854 Option 2 One time payment 2,15,000.00 Ans Option 1 is greater , henc estrictly based on math one should take option I monthly payment.

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