Suppose you are going to retire at the age of 65 today. For your retirement plan...

 

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Suppose you are going to retire at the age of 65 today. For your retirement plan department is offering following options: I. Receive Rs. 3,500,000 today. II. Receive 20 payments of Rs. 192,500 over the next 20 years (). III. Receive Rs. 800,000 today and 15 payments of Rs. 194,000 over the next 15 years (the first payment will be at the end of this year). You have to chose the best possible option. Whereas, your savings account pays an interest rate of 5% annually. a) Would you use the Future Value or Present Value to solve this question? Why? b) Determine which option is best for you. Suppose you are going to retire at the age of 65 today. For your retirement plan department is offering following options: I. Receive Rs. 3,500,000 today. II. Receive 20 payments of Rs. 192,500 over the next 20 years (). III. Receive Rs. 800,000 today and 15 payments of Rs. 194,000 over the next 15 years (the first payment will be at the end of this year). You have to chose the best possible option. Whereas, your savings account pays an interest rate of 5% annually. a) Would you use the Future Value or Present Value to solve this question? Why? b) Determine which option is best for you.

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All the annuity payments are received at the end of each year so present value of ordinary annuity f... View the full answer