Julie has just retired. Her company's retirement program has two options as to how retirement benefits can be received. Under thefirst option, Julie would receive a lump sum of $130,000 immediately as her full retirement benefit. Under the second option, shewould receive $19,000 each year for 5 years plus a lump-sum payment of $75,000 at the end of the 5-year period.Required:1-a. Calculate the present value for the following assuming that the money can be invested at 11%.1-b. If she can invest money at 11%, which option would you recommend that she accept?Complete this question by entering your answers in the tabs below.Reg 1AReg 18If she can invest money at 11%, which option would you recommend that she accept?First optionSecond option< Req 1AReq 1B >

Present value is computed as follows: = Future value / (1 + r)n Here, r = rate of interest n = time…

Answered: Julie has just retired. Her company's…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(Saving for retirement—future value of an annuity) Selma and Patty Bouvier are twins and both work at the Springfield DMV. Selma and Patty Bouvier decide to save for retirement, which is 35 years away. They'll both receive an annual return of 8 percent on their investment over the next 35 years. Selma invests $1,800 per year at the end of each year only for the first 10 years of the 35-year period—for a total of $18,000 saved. Patty doesn't start saving for 10 years and then saves $1,800 per year at the end of each year for the remaining 25 years—for a total of $45,000 saved. How much will each of them have when they retire? Question content area bottom Part 1 a. How much will Selma have when she retires? $enter your response here (Round to the nearest cent.) Part 2 b. How much will Patty have when she retires?
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Julie has just retired. Her company's retirement program has first option, Julie would receive a lump sum of $130,000 imm would receive $19,000 each year for 5 years plus a lump-su