Question
As the beneficiary of a life insurance policy, you have two options for receiving the insurance proceeds. You can receive a lump sum of $250,000
As the beneficiary of a life insurance policy, you have two options for receiving the insurance proceeds. You can receive a lump sum of $250,000 today or receive payments of $2,100 a month for 18 years. If you can earn 6 percent (APR) on your money, which option should you take and why?
A. | You should accept the payments because they are worth $453,600 today. | |
B. | You should accept the payments because they are worth $276,986 today. | |
C. | You should accept the payments because they are worth $250,102 today. | |
D. | You should accept the $250,000 because the payments are worth only $248,857 today | |
E. | You should accept the $250,000 because the payments are worth only $195,413 today |
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