Evaluate each of the following three investments, each costing $1,000 today and providing the returns noted below, over the next five years.

Investment 1: $2,000 lump sum to be received in five years

Investment 2: $300 at the end of each of the next five years

Investment 3: $250 at the beginning of each of the next five years

a. Which investment offers the highest return?

b. Which offers the highest return if the payouts are doubled (i.e., $4,000, $600, and $500)?

c. What causes the big change in the returns on the annuities?