After completing a long and successful career as senior vice president for a large bank, you are
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After completing a long and successful career as senior vice president for a large bank, you are preparing for retirement. Visiting the human resources office, you find that you have several retirement options:
(1) You can receive an immediate cash payment of $750,000,
(2) You can receive $60,000 per year for life (you have a life expectancy of 20 years), or
(3) You can receive $50,000 per year for 10 years and then $80,000 per year for life (this option is intended to give you some protection against inflation). You have determined that you can earn 6 percent on your investments. Which option do you prefer and why?
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