Julie has just retired. Her company’s retirement program has two options as to how retirement benefits can be received. Under the first option, Julie would receive a lump sum of $132,000 immediately as her full retirement benefit. Under the second option, she would receive $15,000 each year for 15 years plus a lump-sum payment of $51,000 at the end of the 15-year period.
Required: 1-a. Calculate the present value for the following assuming that the money can be invested at 14%.
1-b. If she can invest money at 14%, which option would you recommend that she accept?
