John Roberts is 55 years old and has been asked to accept early retirement from...
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Accounting
| John Roberts is 55 years old and has been asked to accept early retirement from his company. The company has offered John three alternative compensation packages to induce John to retire: |
| 1. | $200,000 cash payment to be paid immediately. |
| 2. | A 18-year annuity of $20,000 beginning immediately. |
| 3. | A 10-year annuity of $66,000 beginning at age 65. |
| Required: | |
| a. | Assuming that John is able to invest funds at a 8% rate, determine the present value. (Use PV of $1,PVA of $1, and PVAD of $1) (Round "PV Factors" to 5 decimal places, intermediate and final answers to the nearest dollar amount.) |
| Alternative | PV |
| 1 | $ |
| 2 | $ |
| 3 | $ |
| b. | Which alternative should John choose? | ||||||
|
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