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AL0354335 AL0354335
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A month ago
Patricia is 66 years old and is planning to retire this year. She is covered under her company's retirement policy which gives her two payment options. The first option is to receive annuity payments of $20,000 each year for the next 20 years. The second option is to receive $250,000 immediately upon retirement. The interest rate is 4%.

Required:

a.What is the present value of Patricia's first option?
b.What is the present value of Patricia's second option?
c.Which option should Patricia choose?
Textbook 
Managerial Accounting

Managerial Accounting


Edition: 4th
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boomers1234boomers1234
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A month ago
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More solutions for this book are available here
a.$20,000 × 13.5903 = $271,806
b.$250,000
c.Patricia should take the annuity option as the present value of the annuity is greater
than the $250,000 immediate payment.
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AL0354335 Author
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A month ago
Smart ... Thanks!
KaylenePig
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Yesterday
Brilliant ツ
my life
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2 hours ago
You make an excellent tutor!
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