Question
You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You
You are the beneficiary of a life insurance policy. The insurance company informs you that you have two options for receiving the insurance proceeds. You can receive a lump sum of $95,000 today or receive payments of $1,020 a month for ten years. You can earn 5% on your money. Which option should you take and why? You should accept the payments because they are worth $101,207.63 today. You should accept the payments because they are worth $96,166.98 today. You should accept the payments because they are worth $98,334.20 today. You should accept the $95,000 because the payments are only worth $94,577.13 today. You should accept the $95,000 because the payments are only worth $93,229.66 today.
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