What is the present value of Ralph's net benefits as of his expected retirement date,rounded to the nearest dollar?

Question

Quizplus · Accepted Answer

To find the present value of Ralph's net benefits, we need to discount all the future cash flows to their present value. We are given that Ralph's expected retirement age is 65, and he has a life expectancy of 20 more years after that. So, he will receive annual benefits of $20,000 for 20 years, which gives a total of $400,000. Using a discount rate of 7%, we can calculate the present value of this amount as $222,368, rounded to the nearest dollar. Therefore, the answer is B.

What Is the Present Value of Ralph's Net Benefits as of His