Settlement for insurance claim

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Reference no: EM132010232

(a) As a settlement for an insurance claim, Craig was offered one of two choices. He could either accept a lump-sum amount of $7908 now, or accept monthly payments of $182 for the next four years.

If the money is placed into a trust fund earning 5.37 % compounded quarterly, which is the better option and by how much?

The______monthly payments lump sum option is better by $___.

(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)

(b). What is the discounted value of $ 1554.00 paid at the end of every six months for 5 years if interest is 6 % per annum compounded annually for Craig? The discounted value is $___.

(Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)

Reference no: EM132010232

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