Reference no: EM132499904

Abbi is receiving an insurance payout and has a choice of the following when money is worth 5.4% compounded annually:

Option 1 $8 000 per year paid at the end of each year for 6 years

Option 2 $19 000 paid now, $11 000 paid 5 years from now, and $6 000 paid 6 years from now

Question 1: Which payout should Abbi choose?

1 = Option 1

2 = Option 2

Question 2: Please choose an option using these coded numbers.

Select one:

a. 1

b. 2

Question 3: Calculation is within the margin of error; no decision can be made.