On January 1, 2014, Chen Yu’s Office Supply Store plans to remodel the store and install new display cases. Chen has the following options of payment. Chen’s interest rate is 8%.
a. Pay $180,000 on January 1, 2014.
b. Pay $196,200 on January 1, 2015.
c. Pay $220,500 on January 1, 2016.
d. Make four annual payments of $55,000 beginning on December 31, 2014.

Required
Which option should he choose? Calculate the present value of each option as of January 1, 2014.