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You have been given a choice between two retirement policies as described below.
Policy A: You will receive equal annual payments of $10,000 beginning 35 years from now for 10 years.
Policy B: You will receive one lump-sum of $100,000 in 40 years from now.
Which policy would you choose? Assume rate of interest is 6 percent.
Good Standing
A status indicating that an entity or individual is up-to-date with the fulfillment of legal, financial, or administrative obligations.
Annual Dividend
An annual dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits on a yearly basis.
De Jure Corporation
A corporation that has fully complied with all statutory requirements for incorporation and is legally recognized.
Conditions Precedent
Specific conditions outlined in a contract that must be met before the contract becomes legally binding or before a party is obligated to perform their part of the agreement.
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