You Are the Beneficiary of a Life Insurance Policy

question 15

Multiple Choice

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 of $50,000 today or receive payments of $641 a month for ten 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 $56,451.91 today.
• B) You should accept the payments because they are worth $56,523.74 today.
• C) You should accept the payments because they are worth $56,737.08 today.
• D) You should accept the $50,000 because the payments are only worth $47,757.69 today.
• E) You should accept the $50,000 because the payments are only worth $47,808.17 today.

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Definitions:

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The act of bringing cheese into one's country from another to sell.

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A graphical representation that shows the maximum number of goods or services that can be produced with a given set of resources and technology.

Law Of Comparative Advantage

An economic principle that states countries should specialize in producing goods for which they have a lower opportunity cost of production relative to other countries, leading to increased economic efficiency and trade benefits.