Published on October 20, 2015
For more course tutorials visit www.acc543.com Exercise 24-3A: Present Value Analysis Ginger Smalley expects to receive a $300,000 cash benefit when she retires five years from today. Ms. Smalley’s employer has offered an early retirement incentive by agreeing to pay her $180,000 today if she agrees to retire immediately. Ms. Smalley desires to earn a rate of return of 12 percent. Required a. Assuming that the retirement benefit is the only consideration in making the retirement decision, should Ms. Smalley accept her employer’s offer? b. Identify the factors that cause the present value of the retirement benefit to be less than $300,000.