The Financial Advisoris a weekly column in thelocal
Chapter , Problem 8-34(choose chapter or problem)
The Financial Advisoris a weekly column in thelocal newspaper. Assume you must answer the fol- lowing question. I recently retired at age 65, andI have a tax-free retirement annuity coming duesoon.I have three options. I can receive (A)$30,976now, (B)$359.60 per month for the rest of my life(assume20 years), or (C)$513.80per month for thenext 10 years. What should I do? Ignore the tim- ing of the monthly cash flows and assume that thepayments are received at the end of year.Contributed by D. P. Loucks, Cornell University(a)Develop a choice table for interest rates from0% to 50%. (You do not know what the readersinterest rate is.)(b)Ifi=9%, use an incremental rate of returnanalysis to recommend which option should bechosen.
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