Mr Sundaram is planning to reitre this year. His company can pay him a lump sum reitrement payment of RS 200000 or RS25000 lifetime annunity- whichever he chooses. Mr Sundaram is in good health and estimate to live in for 20 more years. If his interest rate is 12%, which alternative should he choose?
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Answer:
He should choose lifetime annuity
Explanation:
Present Value of Annuity = P[1-(1+r)^(-n)]/r
= 6000(1-(1+.08)^(-15)/.08
= 6000(.6847583)/.08
= 6000*...
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