Question

At retirement (tomorrow) your employer will ask you to make the following choice between cash-out options in your retirement plan. You may have either a) a pension that gives you a check for $1500 at the beginning of every month for the rest of your life (your life expectancy is 20 years) or b) a lump sum payment of $200,000. If you believe that you will only be capable of investing the lump sum at a rate of 7% per year for the remainder of your life, which is the better choice?

Answer 1

Answer:

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