Problem:
Mary has been working at the university for 25 years, with an excellent record of service. As a result, the board wants to reward her with a bonus to her retirement package. They are offering her $75,000 a year for 20 years, starting one year from her retirement date and each year for 19 years after that date. Mary would perfer a one-time payment the day after she retires.
Required:
Question: What would this amount be if the appropriate interest rate is 7%?
Note: Explain all steps comprehensively.