Reference no: EM133179371

Question - Your cousin, Fotunato Buena Suerte has received a great job offer, hard to reject. The only thing holding him back is the defined pension plan. He has worked for 20 years (you started at 25), at Generosa Inc. Fortunato knows you are very good at finance. He wants your help and provides you with the following information:

1. His life expectancy is 85 years according to the actuarial studies

2. He is making $ 60,000 per year and the salary will growth at the inflation rate

3. Once he retires, his pension will be 75% of his last years salary

4. If he leaves the company before retirement, he will get a lump sum equal to the 80% of the present value of his expected pension at retirement age (65)

5. The discount rate for the next 20 years is 6%.

6. The discount rate beginning at age 65 for the next 20 years is 4%

7. The average inflation rate is 3%

Required - What offer from Generosa will give Fortunato the last push for leaving the company? Why?