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13.

value: 10.00 points

After completing a long and successful career as senior vice president for a large bank, you are preparing for retirement. After visiting the human resources office, you have found that you have several retirement options to choose from:

a.	An immediate cash payment of $1.01 million.
b.	Payment of $66,000 per year for life.
c.	Payment of $56,000 per year for 5 years and then $76,000 per year for life (this option is intended to give you some protection against inflation).

You believe you can earn 7 percent on your investments and your remaining life expectancy is 10 years.

Required:
1.	Calculate the net present value of each option. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Enter your answers in dollars but not in millions.)

2.

Determine which option you prefer.

	Option A
	Option B
	Option C