Julie 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 $158,000 immediately as her ful retirement benefit. Under the second option, she would receive $21,000 each year for five years plus a lump- sum payment of $66,000 at the end of the five-year period. Use Excel or a financial calculator to solve. Round answers to the nearest dollar. Required: 1a. Calculate the present value for the following assuming that the money can be invested at 12%.
Julie 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 $158,000 immediately as her ful retirement benefit. Under the second option, she would receive $21,000 each year for five years plus a lump- sum payment of $66,000 at the end of the five-year period. Use Excel or a financial calculator to solve. Round answers to the nearest dollar. Required: 1a. Calculate the present value for the following assuming that the money can be invested at 12%.
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 43P
Related questions
Question
![Julie 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 $158,000 immediately as her full
retirement benefit. Under the second option, she would receive $21,000 each year for five years plus a lump-
sum payment of $66,000 at the end of the five-year period.
Use Excel or a financial calculator to solve. Round answers to the nearest dollar.
Required:
1a. Calculate the present value for the following assuming that the money can be invested at 12%.
Present Value of
First Option
Lump-sum payment
2$
158,000
Present Value of
Second Option
Total present value
$
134,629
1b. If you can invest money at a 12% return, which option would you prefer?
First option
Second option
References
eBook & Resources](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F984c8e7b-e2ca-406f-9243-2fa3333ca1eb%2F14027ecb-f35e-4c56-903c-f9274a1495e5%2Fkcxtuy_processed.png&w=3840&q=75)
Transcribed Image Text:Julie 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 $158,000 immediately as her full
retirement benefit. Under the second option, she would receive $21,000 each year for five years plus a lump-
sum payment of $66,000 at the end of the five-year period.
Use Excel or a financial calculator to solve. Round answers to the nearest dollar.
Required:
1a. Calculate the present value for the following assuming that the money can be invested at 12%.
Present Value of
First Option
Lump-sum payment
2$
158,000
Present Value of
Second Option
Total present value
$
134,629
1b. If you can invest money at a 12% return, which option would you prefer?
First option
Second option
References
eBook & Resources
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