5. You have been offered a settlement from a court case and your options are as follows: (8 Marks)

a. Cash settlement of $185,000 today.

b. Offered $18,000 per year for the next 20 years with payments occurring at the end of the year and interest rates are expected to be 8 percent, compounded monthly.

c. Offered $18,000 per year for the next 20 years with the first payment occurring today and interest rates are expected to be 8 percent, compounded monthly.

Which offer should be accepted? Why? (Show your work)