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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 can receive a lump sum of $200,000 today or receive payments of $1,400 at the end of every month for twenty years. You can earn 6% compounded monthly on your money. Which option should you take and why?

a. You should accept the payments because they are worth $209,414 to you today.

b. You should accept the payments because they are worth $247,800 to you today.

c. You should accept the payments because they are worth $336,000 to you today.

d. You should accept the $200,000 because the payments are only worth $189,311 to you today.

e. You should accept the $200,000 because the payments are only worth $195,413 to you today.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92783313

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