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James and Jane Erickson were very happily married for 35 years, until James had a...

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Accounting

James and Jane Erickson were very happily married for 35 years, until James had a massive heart attack on September 15, 2018 and died at the age of 60. Jane is also 60 years old. Fortunately, James had a $1 million life insurance policy that had several options. Jane has consulted you about which option would be most beneficial to her. A discount rate of 7% is appropriate. Her options are as follows:

a.Receive a lump sum of $1,000,000 immediately.

b.Receive an annuity of $7,000/month for 30 years, with the first payment occurring on the first of each month.

c.Receive an annuity of $7,000/month for 30 years, with the first payment occurring on the end of each month.

d.Receive a lump sum of $500,000 immediately and an annuity of $3,500/month for 30 years, with the first payment e.occurring on the end of each month.

f.Wait 5 years and then receive an annual annuity of $130,000/year at the beginning of each year for 20 years

Use Excel for format and calculations

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