Chris has three options for settling an insurance claim. Option
A will provide $1,500 a month for 6 years. Option B will pay $1,025
a month for 10 years. Option C offers $85,000 as a lump sum payment
today. The applicable discount rate is 6.8 percent compounded
monthly. Which option should Chris select, and why, if he is only
concerned with the financial aspects of the offers?
Chris Has Three Options For Settling An Insurance Claim Option A Will Provide 1 500 A Month For 6 Years Option B Will 1 (90.78 KiB) Viewed 101 times
Chris has three options for settling an insurance claim. Option A will provide $1,500 a month for 6 years. Option B will pay $1,025 a month for 10 years. Option C offers $85,000 as a lump sum payment today. The applicable discount rate is 6.8 percent compounded monthly. Which option should Chris select, and why, if he is only concerned with the financial aspects of the offers? Option A: It provides the largest monthly payment. Option B: It has the largest value today. Option B: It pays the greatest number of payments. Option C: It is all paid today. O Option B: It pays the largest total amount.
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