Your friend Tom is the beneficiary of a life insurance policy where he can choose one of three options:
1. $120,000 in cash upon selecting the option.
2. $6,000 at the end of each quarter for five years.
3. $30,000 in cash plus $9,000 at the end of each quarter for 3years.
Tom asks you which option to exercise. What option would yousuggest? Assume an annual interest rate of 12%. (Show your work.)