Question
You just received an insurance settlement offer related to an accident you had six years ago. The offer gives you a choice of one of
You just received an insurance settlement offer related to an accident you had six years ago. The offer gives you a choice of one of the following three offers: Option A: $1,565 a month for 72 months Option B: $1,012 a month for 10 years Option C: $100,000 as a lump sum payment today You can earn 7.5 percent on your investments. You do not care if you personally receive the funds or if they are paid to your heirs should you die within the settlement period. Which one of the following statements is correct given this information? A)Option A B)Option B because it pays largest amount C)Option C D) Option B because you will receive the most payments E)You are indifferent because all options are equal in value
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