Question 1188856
he could either receive 200,000 as a lump sum or he could receive a monthly pension of 10,000 for the next 2 years.


take 8% and divide it by 12 to get .6666666....% per month.
that's 2/3 of a percent interest per month.


using the finance calculator at <a href = "https://arachnoid.com/finance/index.html" target = "_blank">https://arachnoid.com/finance/index.html</a>, i get the following:



if they give me 200,000 up front and i invest it at 8%  per year compounded  for 24 months, i would receive 9045.6 at the end of each month for the next 24 months.


since that's less than 10,000 at the end of each month, i'm better off taking the 10,000 at the end of each month for 24 months.


if they gave me 10,000 at the end of each month for the next 24 months, i would receive the equivalent of 221,105.43 up front.
that's 21,105.43 more than i would have gotten with their 200,000 up front lump payment.


it is very clear from this analysis that mr. fernandez should take the 10,000 at the end of each month option.


here are the results of my analysis using the arachnoid financial calculator


<img src = "http://theo.x10hosting.com/2021/121501.jpg" >


inputs are everything except pmt.
output is pmt.


<img src = "http://theo.x10hosting.com/2021/121502.jpg" >


inputs are everything except pv.
output is pv.


for both analyses, .....
interest rate is 8% / 12 = .6666666.....% per month.
payments are made at the end of each month.