As the beneficiary of a life insurance policy, 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. If 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 $247,800 to you today.
b. You should accept the $200,000 because the payments are only worth $189,311 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 $195,413 to you today.
e. You should accept the payments because they are worth $209,414 to you today.
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