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You Have Been Given a Choice Between Two Retirement Policies

question 78

Essay

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.


Definitions:

Resistance

The ability of an organism, material, or system to withstand or ward off a particular condition, substance, or force.

Cardiac Output

The volume of blood pumped by the left ventricle into the aorta in 1 minute.

Stroke Volume

The volume of blood pumped by one ventricle during one contraction.

Heart Rate

The number of heart beats per minute, a measure of the heart's activity and an important indicator of health and fitness.

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