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Your friend tom is the beneficiary of a life insurance

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Reference no: EM13481679

Your friend Tom is the beneficiary of a life insurance policy where he can choose one of three options:

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 3years.

Tom asks you which option to exercise. What option would yousuggest? Assume an annual interest rate of 12%. (Show your work.)

Reference no: EM13481679

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