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 a month for 20 years.You can earn 6 percent 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.
Correct Answer:
Verified
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