Early Retirement – Lump Sum vs. Payments
Lump Sum vs. Payments
There is an early retirement plan offered by a MNC.
• There are two options for each employee to opt for early retirement.
- The staff can receive quarterly payment of RM800 each for 3 years, with the first payment made in the first quarter from now
- or a lump sum from today.
Assuming an interest rate of 6% compounded quarterly, what is the lump sum today (present value) that would equal the sum of the future payments to be made?