I. M. Cansado is about to retire. He has a retirement account that allows two payment options. Under Option 1, he can choose to receive $140,000 at the end of six years. Under Option 2, he can choose to receive $20,000 at the end of each year for six years. An interest rate of 10% is applicable to both plans.

(a) Which retirement plan has the highest present value at the beginning of the six-year period?

(b) Which option would you recommend?