You Can Invest $3,000 at the End of Each of the Next

question 19

Multiple Choice

You can invest $3,000 at the end of each of the next 20 years into a retirement account paying 10% annual interest.Alternatively,you can enter into a retirement plan with your employer where,for every yearly (end-of-year) payment of $3,000 you make,the firm will contribute $1,500.Your employer's plan will also last for the next 20 years.The firm guarantees a return of 7% on its retirement plan.Which option is better?

• A) Invest with your employer
• B) Indifferent
• C) Invest on your own

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Definitions:

Off-Peak Period

A time period during which demand for a service or product is lowest, often leading to lower prices.

Marginal Subcontracting Cost

The additional cost incurred for subcontracting an extra unit of production or service, beyond current levels.

Layoff Cost

Expenses incurred by an organization when it temporarily or permanently terminates employment, typically including severance pay and benefits continuation.

Hiring And Training Cost

Expenses incurred in recruiting and equipping new employees with the necessary skills and knowledge for their roles.