You just received an insurance settlement offer related to an accident you had three years ago. The offer provides you with three choices: • Option A: $1,500 a month for 6 years • Option B: $1,025 a month for 10 years • Option C: $85,000 as a lump sum payment payable today You can earn 7.5 percent on your investments and do not care if you personally receive the funds or if they are paid to your heirs should you die within the settlement period. Which option should you select and why is that option justified?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Question 12
You just received an insurance settlement offer related to an accident you had three years ago. The offer
provides you with three choices:
• Option A: $1,500 a month for 6 years
• Option B: $1,025 a month for 10 years
• Option C: $85,000 as a lump sum payment payable today
You can earn 7.5 percent on your investments and do not care if you personally receive the funds or if they
are paid to your heirs should you die within the settlement period. Which option should you select and why
is that option justified?
0000
1 pts
Option A: It provides the largest monthly payment.
Option A: It has the greatest value today.
Option C: It is all paid today.
Option B: It pays the largest total amount.
Transcribed Image Text:Question 12 You just received an insurance settlement offer related to an accident you had three years ago. The offer provides you with three choices: • Option A: $1,500 a month for 6 years • Option B: $1,025 a month for 10 years • Option C: $85,000 as a lump sum payment payable today You can earn 7.5 percent on your investments and do not care if you personally receive the funds or if they are paid to your heirs should you die within the settlement period. Which option should you select and why is that option justified? 0000 1 pts Option A: It provides the largest monthly payment. Option A: It has the greatest value today. Option C: It is all paid today. Option B: It pays the largest total amount.
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