Shuai is 53 years old and has been asked to accept early retirement from his company. The company offered Shuai three alternative compensation packages to induce Shual to retire: 1. $170,000 cash payment to be paid immediately. 2. A 17-year annuity of $18,000 beginning immediately. 3. A 10-year annuity of $54,000 beginning on July 1 of the year Shuai reaches age 63 (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
Shuai is 53 years old and has been asked to accept early retirement from his company. The company offered Shuai three alternative compensation packages to induce Shual to retire: 1. $170,000 cash payment to be paid immediately. 2. A 17-year annuity of $18,000 beginning immediately. 3. A 10-year annuity of $54,000 beginning on July 1 of the year Shuai reaches age 63 (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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A8 please help......
Transcribed Image Text:Shuai is 53 years old and has been asked to accept early retirement from his company. The company offered Shuai three alternative
compensation packages to induce Shual to retire:
1. $170,000 cash payment to be paid immediately.
2. A 17-year annuity of $18,000 beginning immediately.
3. A 10-year annuity of $54,000 beginning on July 1 of the year Shuai reaches age 63 (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
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