Business, 04.10.2019 22:20 ulilliareinhart2

John roberts is 55 years old and has been asked to accept early retirement from his company. the company has offered john three alternative compensation packages to induce john to retire: (fv of $1, pv of $1, fva of $1, pva of $1, fvad of $1 and pvad of $1) (use appropriate factor(s) from the tables provided.) 1.$180,000 cash payment to be paid immediately.2. a 20-year annuity of $16,000 beginning immediately.3. a 10-year annuity of $50,000 beginning at age 65. required: determine the present value, assuming that he is able to invest funds at a 7% rate, which alternative should john choose? (round your final answers to nearest whole dollar amount

Answers: 1

Show answers

Answers

Answer from: carsengilbert

The best alternative will be of 180,000 today.

Explanation:

We calculate the present value of the second and third alternatives and compare with the cash received today:

.2. A 20-year annuity of $16,000 beginning immediately

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C16,000

time20

rate0.07

$16000 \times \frac{1-(1+0.07)^{-20} }{0.07} = PV\\$

PV$169,504.2279

3.- A 10-year annuity of $50,000 beginning at age 65.

$C \times \frac{1-(1+r)^{-time} }{rate} = PV\\$

C $ 50,000

time10 years

rate0.07

$50000 \times \frac{1-(1+0.07)^{-10} }{0.07} = PV\\$

PV$351,179.0770

This start at age 65 currently he's 55 so we bring it to present:

$\frac{Maturity}{(1 + rate)^{time} } = PV$

Maturity $ 351,179.08

time 10 years

rate 0.07

$\frac{351179.07704663}{(1 + 0.07)^{10} } = PV$

PV 178,521.64

As non of the alternatives is better than 180,000 today we pick this alternative.

Answer from: hadwell34

John Roberts should take the lump sum of $180 000

Explanation:

option 1

lump sum = $180 000

option 2

Present Value = P(1-(1+r)^-n)/r

Present Value = 16000(1-(1+0.07)^-20)/0.07

Present Value = 169504.22789 = 169504.23

The present value of option 2 = $169504

option 3

Present Value = P(1-(1+r)^-n)/r

Present Value = 50000(1-(1+0.07)^-10)/0.07

present value (at age 65) = 351179.07643

the annuity of option 3 will start in future when john is 65 years old. the present value of $ 35179.07643 is the present of the annuity at the age of 65. john is 55 years old,We need to discount the present value of $ 35179.07643 to determine how much is option 3 future annuity worth today.

Present value= 351179.07643

N = 65 - 55 =10

present value (at age 55) = (present value at 65)/(1+r)^n

present value (at age 55) = 351179.07643/(1+0.07)^10

present value (at age 55) = 178521.63491 = 178521.64

John roberts is 55 years old and has been asked to accept early retirement from his company. the com

Answer from: Quest

among other factors, composers started writing dynamic markings in their scores because "new instruments allowed for more dynamic ranges and contrast."

dynamics allude to the loudness or softness of music. dynamics offer an approach to demonstrate articulation in sheet music. they to drive the enthusiastic substance of music through volume and force. maybe you could alter both the volume and the shading profundity on your screen at the same time. we can likewise think about the force side of elements as the quality of a note. a few notes are intended to be played delicately and gently, while others are intended to be played all the more firmly.

some dynamics markings have a letter 'm,' which remains for mezzo, signifying 'medium.' so a mezzo piano unique stamping resembles this (mp) and intends to play medium calm, while a mezzo specialty dynamic resembles this (mf) and intends to play medium loud.

Answer from: Quest

Answerfirst blank(more elastic); second blank(resources and firms can enter the industry);

Another question on Business

Business, 22.06.2019 11:10

Your team has identified the risks on the project and determined their risk score. the team is in the midst of determining what strategies to put in place should the risks occur. after some discussion, the team members have determined that the risk of losing their network administrator is a risk they'll just deal with if and when it occurs. although they think it's a possibility and the impact would be significant, they've decided to simply deal with it after the fact. which of the following is true regarding this question? a. this is a positive response strategy.b. this is a negative response strategy.c. this is a response strategy for either positive or negative risk known as contingency planning.d. this is a response strategy for either positive or negative risks known as passive acceptance.

Answers: 2

Answer

Business, 22.06.2019 16:00

In macroeconomics, to study the aggregate means to study blank

Answers: 1

Answer

Business, 22.06.2019 17:30

An essential element of being receptive to messages is to have an open mind true or false

Answers: 2

Answer

Business, 22.06.2019 18:30

Health insurance protects you if you experience any of the following except: a: if you have to be hospitalized b: if you damage someone's property c: if you need to visit a clinic d: if you can't work because of illness

Answers: 2

Answer

You know the right answer?

John roberts is 55 years old and has been asked to accept early retirement from his company. the com...

Questions