Grandma Jonesy died, leaving to her Grandson Bart, an insurance policy contract

that provides that the beneficiary (Bart) can choose any one of the following four options.

(a) $200,000 immediate cash.

(b) $12,000 every 3 months payable at the end of each quarter for 5 years.

(c) $50,000 immediate cash and $5,000 every 3 months for 10 years, payable at the beginning of each 3-month period.

(d) $12,000 every 3 months for 4 years and $3,750 each quarter for the following 10 quarters, all payments payable at the

end of each quarter.

Instructions

If money is worth 2% per quarter, compounded quarterly, which option would you recommend that Bart exercise?