Time value of money concepts of life insurance policy

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Reference no: EM1327619

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 amount of $50,000 today, or receive payments of $641 a month for 10 years. You can earn 6.5% on your money. Which option should you take and why?

a. You should accept the payments, because they are worth $56,452 today.
b .You should accept the payments, because they are worth $56,737 today.
c. You should accept the $50,000 because the payments are worth only $47,758 today.
d. You should accept the $50,000 because the payments are worth only $47,808 today.

Reference no: EM1327619

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