Exercise 4 Assuming that the interest rate is 5%, which of the following is more valuable? (a) $5,000 today (6) $10,000 at the end of five years (c) $9,000 at the end of four years. (d) $300 a year in perpetuity (meaning forever), with the first payment at the end of this year. Exercise 5 You are the CFO of Termination, Inc. Your company has 40 employees, each earing $40,000 per year. Employee salaries grow at 4% per year. Starting from next year, and every second year thereafter, eight employees retire and no new employees are recruited. Your company has in place a retirement plan that entitles retired workers to an annual pension equal to their annual salary at the moment of retirement. Life expectancy is twenty years after retirement, and the annual pension is paid at year-end. The return on investment is 10% per year. What is the total value of your pension liabilities? Exercises You are the CFO of Termination, Inc. Your company has 40 employees, each earing $40,000 per year. Employee salaries grow at 4% per year. Starting from next year, and every second year thereafter, eight employees retire and no new employees are recruited. Your company has in place a retirement plan that entitles retired workers to an annual pension equal to their annual salary at the moment of retirement. Life expectancy is twenty years after retirement, and the annual pension is paid at year-end. The return on investment is 10% per year. What is the total value of your pension liabilities