A retirement plan provides its enrollees with two options. Option 1 provides participants with $50,000 a year over the next 10 years. Option 2 pays a lump sum payment of $300,000 today (and no future payments). Suppose an enrollee takes Option 2. What is the enrollee’s likely discount factor?
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A retirement plan provides its enrollees with two options. Option 1 provides participants with $50,000 a year over the next 10 years. Option 2 pays a lump sum payment of $300,000 today (and no future payments). Suppose an enrollee takes Option 2. What is the enrollee’s likely discount factor? 3.2% 9.8% 11.1% 5.7%
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