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8 May, 06:59

Instead of waiting to receive her payments over time Jeanne decides to obtain the greatest amount of money out of her annuity immediately. Which option did she choose? A. Straight Life Option (Life Income) B. Lump SumC. Life Income Period CertainD. Life Income with Refund

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  1. 8 May, 09:29
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    B. Lump Sum

    Explanation:

    An annuity refers to a payment which is made in specified interval of time period. Generally there is an interest factor involved in such payments.

    But when we refer to the case given, as Jeanne is ready to forego the interest and rather receive a great payment today, in settlement of the entire annuity it is a lump sum payment.

    Lump sum payment is one time payment for settling the entire amount of annuity. As it is the discounted value of annuity today less the charges or commission involved if any.
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