A life insurance beneficiary would receive $3,100 per month for 10 years, although he prefers to receive the full equivalent at the beginning of the term. How much will they give you if the money yields an average of 8.35% per year compounded by months?

To calculate the equivalent lump sum that the life insurance beneficiary would receive if they prefer to receive the full amount at the beginning of the term, we can use the concept of present value. The present value is the current worth of a future cash flow, taking into account the time value of money. In this case, the beneficiary would receive $3,100 per month for 10 years, which amounts to a total of 10 years * 12 months = 120 monthly payments. To find the present value, we can use the formula for the present value of an annuity: PV = PMT * (1 - (1 + r)^(-n)) / r Where: PV = Present value (the lump sum amount the beneficiary wants) PMT = Payment amount per period ($3,100) r = Interest rate per period (8.35% per year compounded monthly, so r = 8.35% / 12 / 100 = 0.006958) n = Number of periods (120) Plugging in the values, we can calculate the present value: PV = $3,100 * (1 - (1 + 0.006958)^(-120)) / 0.006958 Using a calculator or spreadsheet, the present value can be calculated as: PV ≈ $292,494.73 Therefore, the beneficiary would receive approximately $292,494.73 if they choose to receive the full equivalent amount at the beginning of the term