"Exercise 16-3 Determining the present value of a lump-sum future cash receipt
Marsha Bittner expects to receive a $600,000 cash benefit when she retires five years from today. Ms. Bittner’s employer has offered an early retirement incentive by agreeing to pay her $360,000 today if she agrees to retire immediately. Ms. Bittner desires to earn a rate of return of 12 percent.
Required
a. Assuming that the retirement benefit is the only consideration in making the retirement deci- sion, should Ms. Bittner accept her employer’s offer?
b. Identify the factors that cause the present value of the retirement benefit to be less than $600,000."
(ACC 201 594)
ACC 201. McGraw-Hill Create. <vbk:9781121253193#page(594)>.
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