Class 23-1.xlsx - Gail Trevino expects to receive a \$500,000 cash benefit when she retires Trevino’s employer has offered an early retirement

# Class 23-1.xlsx - Gail Trevino expects to receive a...

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Year Beginning Balance Interest Earned 1 2 3 4 5 Using Time Value of Money Tables: Present Value Factor from Table Using Time Value of Money Tables: Future Value Factor from Table d. Identify the factors that cause the present value Gail Trevino expects to receive a \$500,000 cash be Trevino’s employer has offered an early retirement agrees to retire immediately. Ms. Trevino desires to a. If Ms. Trevino accepts the \$325,000, how much 8 percent and makes no withdrawals over the 5-ye b. What is the value today for Ms. Trevino of receiv return of 8 percent per year? In other words, how indifferent between receiving that amount today o the money over the next 5 years) c. Assuming that the retirement benefit is the only should Ms. Trevino accept her employer’s offer?
Ending Balance 0 0 0 0 0 Future Value 0 Present Value 0 e of the retirement benefit to be less than \$500,000. enefit when she retires five years from today. Ms. t incentive by agreeing to pay her \$325,000 today if she o earn a rate of return of 8 percent. will it be worth in 5 years? Assume she earns a return of ear period ving \$500,000 in five years, assuming she can earn a much money would she need to receive today to be or \$500,000 three years from now? (She would invest y consideration in making the retirement decision,
n Inflow Factor (i=8%) 1 2 3 Total Present Value c. Explain the consistency or lack of consistency in the a The dean of the School of Fine Arts is trying to decide wh The machine would add to student convenience, but the funds. Estimates of cash inflows from copy machines tha machine would probably produce incremental cash inflo a three-year useful life with a zero salvage value. a. Use Present Value Table 1 (Present Value of \$1) to det for a copy machine. b. Use Present Value Table 2 (Present Value of an Annuit willing to pay for a copy machine. Annuity Amount Factor from Table
PV 0 0 0 0 0 answers to Requirements a and b. hether to purchase a copy machine to place in the lobby of the buil e dean feels compelled to earn an 8 percent return on the investme at have been placed in other university buildings indicate that the c ows of approximately \$25,000 per year. The machine is expected to

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• Spring '19
• Alyssa Vowell

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