Your mother is planning to retire this year. Her firm has offered her a lump-sum...
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Your mother is planning to retire this year. Her firm has offered her a lump-sum retirement payment of $40,000 or a $4,000 lifetime annuitywhichever she chooses. Your mother is in reasonably good health and expects to live for at least 18 more years. Calculate the present values of each alternative, assuming that an 6 percent interest rate is appropriate to evaluate the annuity. What is the Lump sum payment?
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