Receive annual payments

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1. You have been given the choice between two retirement policies:

Policy A:You will receive annual payments of $26,000 beginning thirty five years from now for twenty years.

Policy B:You will receive one lump sum of $200,000 in forty years. Which policy should you choose assuming an annual interest rate of 12percent?

Policy A

Policy B

2. You must decide between $25,000 in cash today or $30,000 in cash to be received two years from now. If you can earn 8 percent interest on your investments, which is the better deal?

$30,000 in two years

$25,000 today

Either options are Okay

Reference no: EM131466587

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