Judy Thomas has a $2,100 overdue debt for medical books and supplies at Joe's Bookstore. She has only $700 in her checking account. Joe's tells her that she may settle the account in one of two ways (A and B below) since she can't pay it all now:

1. Pay $700 now and $1,750 when she completes her residency, two years from today

2. Pay $2,800 one year after completion of residency, three years from today

assuming that the cost of money is the only factor in Judy's decision and that the cost of money to her is 8%, which alternative should she choose? Your answer must be supported with calculations