Question
Your rich uncle dies, leaving you a life insurance policy worth $100,000. The insurance company also offers you another option. Which option should you use?
Your rich uncle dies, leaving you a life insurance policy worth $100,000. The insurance company also offers you another option. Which option should you use?
(1) The other option is an option (an annuity) to receive $150/week for 20 years, with the first payment due in week 1. The discount rate is 5% per year weekly compounding. There are 52 weeks a year.
(2) The other option is an option (an annuity) to receive $700/month for 20 years, with the first payment due in month 1. The discount rate is 5% per year monthly compounding.
(3) The other option is an option (an annuity) to receive $150/week for 20 years, with the first payment due in week 1. The discount rate is 4.5% per year weekly compounding. There are 52 weeks a year.
(4) The other option is an option (an annuity) to receive $700/month for 20 years, with the first payment due in month 1. The discount rate is 5.5% per year monthly compounding.
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Introductory Econometrics For Finance
Authors: Chris Brooks
2nd Edition
052169468X, 9780521694681
