Julie has just retired. her company's retirement program has two options as to how retirement benefits can be received. under the first option, julie would receive a lump sum of $138,000 immediately as her full retirement benefit. under the second option, she would receive $25,000 each year for 6 years plus a lump-sum payment of $57,000 at the end of the 6-year period.

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Snoop

30 December, 15:03

Julie has just retired. her company's retirement program has two options as to how retirement benefits can be received. under the first option, julie would receive a lump sum of $138,000 immediately as her full retirement benefit. under the second option, she would receive $25,000 each year for 6 years plus a lump-sum payment of $57,000 at the end of the 6-year period.

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Talan Herrera · Answer 1

Julie will be better off taking the extended payout plan. If she takes the $138,000 immediately, she could, assuming an interest rate of 6%, put it in the bank and have $195,756 at the end of 6 years. If she takes the extended payout, she can put $25,000 in the bank every year for six years, and earn interest for a total of $184,846. After 6 years, she also gets $57,000, for a total of $241,846.