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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 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 $400,000 today or receive payments of $2,400 a month for 25 years. You can earn 4 percent (annual) on your money. Which option should you take and why? You should accept the payments because they are worth $454,686 to you today You should accept the payments because they are worth $487,263 to you today You should accept the lump sum ($400,000) because the payments are only worth $389,311 to you today You should accept the lump sum ($400,000) because the payments are only worth $354,686 to you today
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