John Roberts is 50 years old and has been asked to accept early retirement from

Question

John Roberts is 50 years old and has been asked to accept early retirement from his company. The company has offered John three alternative compensation packages to induce John to retire:

Assuming that John is able to invest funds at a 8% rate, determine the present value. (Use PV of $1, PVA of $1, and PVAD of $1) (Round "PV Factors" to 5 decimal places, intermediate and final answers to the nearest dollar amount.)

John Roberts is 50 years old and has been asked to accept early retirement from his company. The company has offered John three alternative compensation packages to induce John to retire:

Explanation / Answer

PV1 = 179000

PV2 = 17000x1.08(1-1.08-20) /0.08 = 180261.186

PV3 = [56000x 1.08(1-1.08-10)/0.08 ] x 1.08-10 = 187975.8322

The third option is the best option as per net present value.

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