Present value of each plan
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Juanita Martinez is ready to retire and has a choice of three pension plans.
Plan A provides for an immediate cash payment of $200,000.
Plan B provides for the payment of $20,000 per year for 10 years and the payment of $200,000 at the end of year 10.
Plan C will pay $35,000 per year for 10 years. Juanita Martinez desires a return of 8 percent.
Determine the present value of each plan and select the best one.
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Solution Summary
The solution explains how to determine the present value of each plan and select the better one
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Plan A provides for an immediate cash payment of $200,000.
Since the payment is being made now, the PV is $200,000
Plan B provides for the payment of $20,000 per year for 10 years and the payment ...
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