Question: Lucy is offered the choice between the following three options:
(a) She gets $3200 each year for 10 years. First payment due after 1 year
(b) She gets $7000 today, and thereafter $3000 each year for 5 years. First payment after 1 year
(c) She gets $4000 each year for 10 years. First payment only due after 5 years .The annual interest rate is 8%.
Calculate the present values of the three options. What would you advise Lucy to choose?