Several years ago John bought an endowment insurance policy that is about to mature. He has the option of receiving $20,000 now or $40,000 in 10 years’ time. Because he has retired and pays no income tax, he could invest the money with interest rate expected to remain at 10% a year for the foreseeable future. Which option should he take?
Several years ago John bought an endowment insurance policy that is about to mature. He has the option of receiving $20,000 now or $40,000 in 10 years’ time. Because he has retired and pays no income tax, he could invest the money with interest rate expected to remain at 10% a year for the foreseeable future. Which option should he take?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 39P
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Several years ago John bought an endowment insurance policy that is about to mature. He has the option of receiving $20,000 now or $40,000 in 10 years’ time. Because he has retired and pays no income tax, he could invest the money with interest rate expected to remain at 10% a year for the foreseeable future. Which option should he take?
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