Write a spreadsheet model to include the following:
pensioners current age, son's current age
with an average annual inforlation rate of 2.5-3.0%, for each year from now on: culculate the current value of the pension annual payment: current value = value in year N /[ (1+0.03) to the power N]
sum up the total current value for each of the years from now on for both options
ask what-if question such as: if the penssioner lives another 5, 10, ...., years, what is current value of the total sum to be recieved by both the pensioner and the son rest of his live if he lives till 65, 70, 80,...
simply compare the two options with the above, then you will have the anwser.
