Posted: February 12th, 2016

Juanita Martinez is ready to retire and has a choice of three pension plans.

Juanita Martinez is ready to retire and has a choice of three pension plans.
Plan A provides for an immediate cash payment of $200,000.

Plan B provides for the payment of $20,000 per year for 10 years and the payment of $200,000 at the end of year 10.

Plan C will pay $35,000 per year for 10 years. Juanita Martinez desires a return of 8 percent.

Determine the present value of each plan and select the best one.