The beneficiary of a Life Insurance policy can choose one of three options of receiving benefits:

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1. $120,000 in cash upon selecting the option.

2. $6,000 at the end of each quarter* for five years.

3. $30,000 in cash plus $9,000 at the end of each quarter* for 3 years.

The person asks you which option to exercise based solely on time value of money calculations? Using that very narrow premise, what option would you suggest? Assume an annual interest rate of 12%

Related Book For answer-question

Financial Accounting and Reporting a Global Perspective

ISBN: 978-1408076866

4th edition

Authors: Michel Lebas, Herve Stolowy, Yuan Ding

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Posted Date: Nov 23, 2023 06:22 AM

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The beneficiary of a Life Insurance policy can choose one of three options of receiving benefits:

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Expert Answer:

To determine the best option based solely on time value of money calculations we can evaluate the pr... View the full answer

Financial Accounting and Reporting a Global Perspective

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