Answer: If he retires 10 years from now he will receive a retirement benefit of $650,000 and if he retires today he will receive $340,000 today, we need to find out if 650,000 is discounted at 6% for 10 years will its present value be more or less than 340,000. If the present value of 650,000 10 years from now discounted at 6% will be more than 340,000 he should not retire immediately and if the present value is less than 340,000 he should retire immediately.
Present Value = Future Value/(1+Rate)^Number of periods
Future Value = 650,000
Number of periods = 10
Rate = 6%
Present Value = 650,000/1.06^10
Present Value=362956
The present Value of 650,000 is more than 340,000 which means that Kyrie should not retire immediately.
Explanation:
