John Roberts is 55 years old and has been asked to accept early retirement from his company. The company has offered John three alternative compensation packages to induce John to retire:

1. $180,000 cash payment to be paid immediately.

2. A 20-year annuity of $16,000 beginning immediately.

3. A 10-year annuity of $50,000 beginning at age 65.

Required:Which alternative should John choose assuming that he is able to invest funds at a 7% rate?

I already have the answer, i just need someone to explain why annuity is used rather than annuity due for number 3. It says beginning.