Equal to the market return on basket of equity investments

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A year from now, assume the company offers you early retirement. They give you the option of a lump sum payment of $5mm or growing annuity starting in five years in the amount of $250,000 and growing by 4% per year. The annuity will have 20 payments and then stop.  Assume a discount rate equal to the market return on a basket of equity investments.Do you take the lump sum or the annuity for early retirement?

Reference no: EM131892208

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