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A person is about to retire and must choose between three retirement plan options. One provides $55,000 per year for the remainder of his life.

4. A person is about to retire and must choose between three retirement plan options. One provides $55,000 per year for the remainder of his life. Another provides 85 percent of this amount and increases by 5% each year. A third option gives him $400,000 lump-sum settlement. If is remaining life expectancy is twelve years, the prime interest rate is 8 percent, and he can ignore taxes, which should he choose?

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