Ming just received the estimate for insurance on her company's buildings and other fixed assets $($e$.$g$.,$ equipment and furniture$).$ The

bid shows the following payment options for Ming's company:

Pay the annual premium of $$8,500$ in full at the beginning of each year.

Pay the annual premium in $12$ monthly installments of $$785,$ due at the beginning of each month.

Ming expects similar insurance coverage to be in place for $3$ years, at which time the company is planning to expand and will need to

consider other insurance providers and coverage.

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$($b$)$

Determine the present value of each option, recognizing that Ming's company has a WACC of $12\%.$ Use the equation method to

calculate the present value of option $2.($Round present value factor calculations to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and final answer to $2$

decimal places e$.$g$.5,125\mathrm{.}36.)$

Option $1$

Option $2$

Present value

$

$

$