Business, 29.05.2021 23:10 AeelynRamos

Doug Stamper just received an insurance settlement offer related to an accident he had several years ago. The offer gives Stamper a choice of one of the following three offers (payments are at the end of the period): Option A: $2,000 per month for 84 months
Option B: $1,100 per month for 15 years
Option C: $125,000 lump sum today

Stamper can earn 6 percent on his investments. He does not care if he personally receives the funds or if they are paid to his heirs should he die within the settlement period. Which one of the following statements is CORRECT given this information?

a. Option B is the best choice because you will receive the most payments.
b. Option A is the best choice because it has the largest present value.
c. Option A is the best choice as it provides the largest monthly payment.
d. Option C is the best choice because it has the largest present value.
e. Option B is the best choice because it pays the largest total amount.

Answers: 2

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Doug Stamper just received an insurance settlement offer related to an accident he had several years...

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