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The Mutual Assurance and Life Company is offering an insurance policy under either of the following two terms:

a. Make a series of twelve $1,200 payments at the beginning of each of the next 12 years (the first payment being made today).

b. Make a single lump-sum payment today of $10,000 and receive coverage for the next 12 years.

If you had investment opportunities offering an 8 percent annual return, which alternative would you prefer?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92092660

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