Which alternative should smokey choose assuming

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Reference no: EM13140508

Smokey Sims is 60 years old and has been asked to accept early retirement from his company. The company has offered three alternative compensation packages to induce Smokey to retire:

1.$400,000 cash payment to be paid immediately.

2. A 15-year annuity of $40,000 beginning immediately.

3. A 15-year annuity of $45,000 beginning at age 65.

Required:

Which alternative should Smokey choose assuming that he is able to invest funds at a 6% rate?

Reference no: EM13140508

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