You are the beneficiary of a $200,000 life insurance policy that has both a lump-sum option and an annuity option
The annuity option pays $20,000 per year for a 15 year period beginning at the end of the year. Using your financial calculator or the tables in the book, determine the minimum rate of return you must be assured of earning over the 15 year period if you were to choose the $200,000 lump-sum settlement.
A) 5.6%
B) 6%
C) 3.25%
D) 7.2%
Answer: A
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