Omar Morales, an Older Employee, Is Considering an Early Retirement

question 7

Multiple Choice

Omar Morales, an older employee, is considering an early retirement package that his employer has offered; it includes improved benefits and cash bonuses. Which of the following applies to this inducement?

• A) It is called a silver handshake.
• B) It is called a golden parachute.
• C) It is called a platinum cushion.
• D) It is called severance pay.

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Definitions:

Present Value

The present-day worth of money expected in the future or series of cash flows, calculated using a fixed rate of return.

Compounded Monthly

The process where interest is added to the principal amount each month, and future interest is earned on the increased balance.

Effective Annual Rate

The interest rate on an investment or loan that accounts for the effect of compounding over a one-year period.

Retirement Supplement

Additional income or benefits provided to individuals upon retirement, often as part of pensions or savings plans.