Question
The beneficiary of a Life Insurance policy can choose one of three options of receiving benefits: 1. $120,000 in cash upon selecting the option.
The beneficiary of a Life Insurance policy can choose one of three options of receiving benefits:
1. $120,000 in cash upon selecting the option.
2. $6,000 at the end of each quarter* for five years.
3. $30,000 in cash plus $9,000 at the end of each quarter* for 3 years.
The person asks you which option to exercise based solely on time value of money calculations? Using that very narrow premise, what option would you suggest? Assume an annual interest rate of 12%
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Financial Accounting and Reporting a Global Perspective
Authors: Michel Lebas, Herve Stolowy, Yuan Ding
4th edition
978-1408066621, 1408066629, 1408076861, 978-1408076866
