A friend of yours (who did not yet take an informative finance class) also wanted to sell two basketball tickets and found a ticket broker who offered these payment arrangements in exchange for the two tickets (assume that the broker will honor all agreements):

a. $50 per year forever, starting one year from now

b. $200 now and $100 a year that will be paid for 6 years, beginning at the end of the fourth year.

Value each of these payment arrangements as of today assuming that your friend earns 10 percent simple interest annually. Which arrangement should be chosen?