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As a result of a slowdown in operations, Mercantile Stores is offering to employees who have been terminated a severance pack

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Solution:

Table values are based on :
Cash Flow Amount i= n= PV Factor Present value
Cash Payment $190,000.00 9% 0 1 $190,000
Present value of $190,000 Face Value $190,000.00 9% 1 0.91743 $174,312
Present value of $39,000 annuity $39,000.00 9% 2-21 8.37481 $326,618
Total $690,929
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