Assume you have two investment options, Option A, which earns 3.5% and starts with a payment of $18,000 in Year 1 (age 41), and Option B, which earns 6.0% and has the first payment of $25,000 but doesn’t start paying until Year 6. The opportunity cost is 8.0%. What is the NPV of Option A through 20 years?

a. What is the NPV of Option B through 20 years?

b. In what year (not age) does Option The first pay more than $25,000? (list the number only (e.g., “16” but do not include the parentheses).

c. What is the difference in income payment between Option A and Option B in Year 18? (list as negative (e.g., - $10,000) if Option B – Option A = negative; list as positive (e.g., $10,000) if Option B – Option A = positive).

d. What is the IRR in year 13 for choosing Option B instead of Option A?

e. What year does the IRR turn positive if choosing Option B? (list the number only).

f. What is the NPV of Option B through 20 years if it starts paying the $25,000 at Year 5 instead of Year 6?

g. Now what year (not age) does the IRR turn positive if choosing Option B? (list the number only).