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Mathematics, 08.02.2021 16:40 duhitzmay9395

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.

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Answers: 1

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