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Select the correct answer from each drop-down menu.
John is preparing to retire, and he knows he'll receive a pension from his
company. The pension will pay John $25,000 per year
for 20 years. A lump-sum payment of $500,000 today is also an option for John, and the account John would use for that money
would pay interest of 3% per year, compounded annually.
Since the present value of all the yearly pension payments is_______
John should choose the________
option for his pension.

Respuesta :

500,000
Lump sum with the 3% interest
pamelaguzman270

Answer:

John is preparing to retire, and he knows he’ll receive a pension from his company. The pension will pay John $25,000 per year for 20 years. A lump-sum payment of $500,000 today is also an option for John, and the account John would use for that money would pay interest of 3% per year, compounded annually.

Since the present value of all the yearly pension payments is "$371,937"

, John should choose the "lump-sum"  option for his pension.

Step-by-step explanation:

I got it right on Plato

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