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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 starting in one month Option B: $1,012 a month for 10 years starting in one month 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 of the following statements regarding the three options is correct? You are indifferent to the three options as they are all equal in value. (B) Option B is the best choice because it pays the largest total amount. (C) Option A is the best choice as it provides the largest monthly payment. (D) Option C is the best choice because it has the largest present value. (E) Option B is the best choice because you will receive the most payments
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