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QUESTION # 10

In the World of FP&A, you are responsible to help your Corporate Controller @ ExxonMobil determines the best solutions among alternatives for employment separation packages when the company need to scale back during the business slowdown cycle.

The company offers the separation package in 2 forms:

(1) a lum sum check @ time of separation or, (2) of monthly payments during the next 12 months.

QUESTION: Perform your TVM/DCF calculations using Excel equations in the spreadsheet provided below. Should John Scott take the lum sum check of $62,333.33; or monthly installment checks of $5,444.44 for the next 12 months?

QUESTION # 10 (10 Points) (5 Minute Question) Problem Statement: ExxonMobil - Employee Employment Separation Decision In the World of FP&A, you are responsible to help your Corporate Controller @ ExxonMobil determines the best solutions among alternatives for employment separation packages when the company need to scale back during the business slowdown cycle. The company offers the separation package in 2 forms: (1) a lum sum check @ time of separation or, (2) of monthly payments during the next 12 months. (2) monthly payments during the next 12 months. The Available Information: (1) John Scott has worked for the firm for 11 years. The company offers John one month of full pay for each year of service. (2) His annual salary - $68,000.00 (3) His monthly salary = $5,666.67 (4) The company offers John a lum sum separation check of = $62,333.33 (5) The company also offers John a 12-month monthly separation pay of = $5,444.44 (6) The current discount rate refers to saving account interest rate @ = 0.68% QUESTION: Perform your TVM/DCF calculations using Excel equations in the spreadsheet provided below ............ Should John Scott take the lum sum check of $62,333.33; or monthly installment checks of $5,444.44 for the next 12 months? ITEMS / MONTHS 1 2 3 4 5 7 8 9 10 11 12 $5,444.44 $5,444.44 $5,444.44 $5,444.44 $5,444.44 $5,444.44 $5,444.44 $5,444.44 $5,444.44 $5,444.44 $ 5,44.44 $5,444.44 $ 5,444.44 $5,444.44 (1) (2) (3) (4) (5) Monthly Checks (FV) Monthly Checks (PV) Total Monthly Checks (PV) Lum Sum Check (PV) $0.00 $62,333.33 Delta ($62,333.33)

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