After completing a long and successful career as senior vice president for a large bank, you are preparing for retirement. After visiting the human resources office, you have found that you have several retirement options to choose from: a. An immediate cash payment of $1.13 million. b. Payment of $69,000 per year for life. c. Payment of $59,000 per year for 5 years and then $79,000 per year for life (this option is intended to give you some protection against inflation). You believe you can earn 7 percent on your investments and your remaining life expectancy is 10 years. Required: 1. Calculate the present value of each option. (Future Value of $1. Present Value of $1. Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Enter your answers in whole dollars, not in millions. Round the final answer to nearest whole dollar.) Present Value

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Subject: accounting 

After completing a long and successful career as senior vice president for a large bank, you are preparing for retirement. After visiting
the human resources office, you have found that you have several retirement options to choose from:
a. An immediate cash payment of $1.13 million.
b. Payment of $69,000 per year for life.
c. Payment of $59,000 per year for 5 years and then $79,000 per year for life (this option is intended to give you some protection
against inflation).
You believe you can earn 7 percent on your investments and your remaining life expectancy is 10 years.
Required:
1. Calculate the present value of each option. (Future Value of $1, Present Value of $1, Future Value Annuity of $1. Present Value
Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Enter your answers in
whole dollars, not in millions. Round the final answer to nearest whole dollar.)
Option A
Option B
Option C
$
Present Value
1,130,000
Transcribed Image Text:After completing a long and successful career as senior vice president for a large bank, you are preparing for retirement. After visiting the human resources office, you have found that you have several retirement options to choose from: a. An immediate cash payment of $1.13 million. b. Payment of $69,000 per year for life. c. Payment of $59,000 per year for 5 years and then $79,000 per year for life (this option is intended to give you some protection against inflation). You believe you can earn 7 percent on your investments and your remaining life expectancy is 10 years. Required: 1. Calculate the present value of each option. (Future Value of $1, Present Value of $1, Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Enter your answers in whole dollars, not in millions. Round the final answer to nearest whole dollar.) Option A Option B Option C $ Present Value 1,130,000
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