Sally Brown died, leaving to her husband Linus an insurance policy contract that provides that the beneficiary (Linus) can choose any one of the following four options.
$55,000 immediate cash.
$3,700 every 3 months payable at the end of each quarter for 5 years.
$18,000 immediate cash and $1,600 every 3 months for 10 years, payable at the beginning of each 3-month period.
$4,000 every 3 months for 3 years and $1,200 each quarter for the following 25 quarters, all payments payable at the end of each quarter.
If money is worth 2½% per quarter, compounded quarterly, which option would you recommend that Linus exercise?© BrainMass Inc. brainmass.com June 3, 2020, 11:37 pm ad1c9bdddf
The solution provides a full explanation with detailed calculations, comparison based on quantitative measurement and diagrams in a 3-page Word document.