Problem 5-8 (Algo) Deferred annuities [LO5-8] Shuai is 50 years old and has been asked to accept early retirement from his company. The company offered Shuai three alternative compensation packages to induce Shuai to retire: 1. $179,000 cash payment to be paid immediately. 2. A 20-year annuity of $17,000 beginning immediately. 3. A 10-year annuity of $56,000 beginning on July 1 of the year Shuai reaches age 60 (after 10 years) Required: Determine the present value of each alternative, assuming that Shuai is able to invest funds at a 8% rate Which alternative should he choose? Note: Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Alternative 1 2 PV 3 Shuai should choose
Problem 5-8 (Algo) Deferred annuities [LO5-8] Shuai is 50 years old and has been asked to accept early retirement from his company. The company offered Shuai three alternative compensation packages to induce Shuai to retire: 1. $179,000 cash payment to be paid immediately. 2. A 20-year annuity of $17,000 beginning immediately. 3. A 10-year annuity of $56,000 beginning on July 1 of the year Shuai reaches age 60 (after 10 years) Required: Determine the present value of each alternative, assuming that Shuai is able to invest funds at a 8% rate Which alternative should he choose? Note: Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Alternative 1 2 PV 3 Shuai should choose
Chapter3: Income Sources
Section: Chapter Questions
Problem 59P
Related questions
Question
Please answer typing format
![Problem 5-8 (Algo) Deferred annuities [LO5-8]
Shuai is 50 years old and has been asked to accept early retirement from his company. The company
offered Shuai three alternative compensation packages to induce Shuai to retire:
1. $179,000 cash payment to be paid immediately.
2. A 20-year annuity of $17,000 beginning immediately.
3. A 10-year annuity of $56,000 beginning on July 1 of the year Shuai reaches age 60 (after 10 years)
Required:
Determine the present value of each alternative, assuming that Shuai is able to invest funds at a 8% rate
Which alternative should he choose?
Note: Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial
calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Alternative
1
2
PV
3
Shuai should choose](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6b1c4575-9c40-470a-92da-2fd8e07ce943%2Febc5fe6f-b3ca-4e24-be97-bedb7d0270f7%2Fc6an93d_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 5-8 (Algo) Deferred annuities [LO5-8]
Shuai is 50 years old and has been asked to accept early retirement from his company. The company
offered Shuai three alternative compensation packages to induce Shuai to retire:
1. $179,000 cash payment to be paid immediately.
2. A 20-year annuity of $17,000 beginning immediately.
3. A 10-year annuity of $56,000 beginning on July 1 of the year Shuai reaches age 60 (after 10 years)
Required:
Determine the present value of each alternative, assuming that Shuai is able to invest funds at a 8% rate
Which alternative should he choose?
Note: Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial
calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Alternative
1
2
PV
3
Shuai should choose
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you