maddycat605 maddycat605

13-08-2024
Business

Answered

John is considering investing in a retirement fund. He has two options: Option A offers a lump sum payment of R500,000 after 10 years, while Option B offers a lump sum payment of R800,000 after 20 years. John wants to analyze these options using time value of money calculations to determine which option is more beneficial. REQUIRED:
1. Calculate the present value of Option A and Option B assuming an annual interest rate of 6%.
2. Use the results obtained in 3.1 above to determine the future value of Option A and Option B after the respective investment periods.

Answer :

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