As the winner of a pasta eating competition your friend has been offered one of the following prizes. Assuming an interest rate of 10% p.a., which alternative should she choose?

Alternative 1: $2,700 per annum at the end of each year for the next 5 years.

Alternative 2: $2,300 at the end of next year with this cash flow growing at 8% p.a. until the end of year 5.

Alternative 3: $16,000 at the end of year 5.

Alternative 4: $6,000 at the end of year 2 and $9,000 at the end of year 5.