You have been given a choice between three retirement policies as described below. Assume that all...

You have been given a choice between three retirement policies as described below. Assume that all payments are expected at the end of the year referenced. For example, if a payment is expected in five years, the payment would be made at the end of the fifth year. If the ten annual payments are to be made beginning in six years, the first payment would occur at the end of the sixth year from today.

Policy A: You will receive 10 equal annual end-of-the-year payments of $82,500 per year beginning in 20 years.

Policy B: You will receive one lump-sum of $1,000,000 in 30 years.

Policy C: You will receive one payment of $200,000 in 10 years, a second payment of $200,000 in 20 years, and a third payment of $200,000 in 30 years.

What is the present value of each retirement policy at a discount rate of 4 percent? Which policy should you choose in this scenario?

What is the present value of each retirement policy at a discount rate of 6 percent? Which policy should you choose in this scenario?

What is the present value of each retirement policy at a discount rate of 8 percent? Which policy should you choose in this scenario?

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago

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