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 $137,000 immediately as her full retirement benefit. Under the second option, she would receive $26,000 each year for seven years plus a lump-sum payment of $56,000 at the end of the seven-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 14%. Present Value of First Option Lump-sum payment Present Value of Second Option Total present value 1b. If you can invest money at a 14% return, which option would you prefer? First option Second option

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 $137,000 immediately as her full retirement benefit. Under the second option, she would receive $26,000 each year for seven years plus a lump-sum payment of $56,000 at the end of the seven-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 14%. Present Value of First Option Lump-sum payment Present Value of Second Option Total present value 1b. If you can invest money at a 14% return, which option would you prefer? First option Second option

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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