Mr. X is going to retire soon. His employer gives him two options; a. An annual pension of Rs. 8,000 for as long as he lives, and b. A lump sum amount of Rs. 50,000 today If he expects to live for 20 years and his time preference rate is 10%, which option is better for X on the basis of Present value calculation or today?

Mr. X is going to retire soon. His employer gives him two options; a. An annual pension of Rs. 8,000 for as long as he lives, and b. A lump sum amount of Rs. 50,000 today If he expects to live for 20 years and his time preference rate is 10%, which option is better for X on the basis of Present value calculation or today?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 19P

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