1. Please help me solve this:
Julie has just retired. Her company
Solution
Since the question is silent on MARR, i have calculated the PV at MARR=12% and 20%. In
both the cases , the PV is less than the lumpsum amount.So the first alternative is better.
Particulars Year Amount
Factor with 12%
discount
PV@12%
Factor with 20%
discount
PV@20%
Fund 1 16000 1.120 14285.71 1.200 11904.76
2 16000 1.254 12755.1 1.440 8857.71
3 16000 1.405 11388.48 1.728 6590.558
4 16000 1.574 10168.29 2.074 4903.689
5 16000 1.762 9078.83 2.488 3648.578
6 16000 1.974 8106.098 2.986 2714.716
7 16000 2.211 7237.587 3.583 2019.878
7 52000 2.211 23522.16 3.583 6564.603
Total 96542.26 47204.49