please show all work so I can underatand this practice problem and apply it to my homework(:

Question 1: Compounding vs. Discounting (8 pts total) Scenario: You have $1.200 to put into a one-year GPS subscription for your tractor. If you purchase the subscription, you expect to receive $1,800 in annual net benefits at the end of Year 1. You have two options Option A: No purchase, walk out with $1,200 today Option B: Purchase the GPS subscription and receive a net benefit of $1,800 in savings at the end of the year. *Assume a 5% annual interest rate. .. Use compounding to determine FV of Option A. In other words, how much will the $1,200 be worth to you one year from now given a 5% annual interest rate. 3 pts Circle which option should you choose based on the FV you calculated in part a? (i.e. Which one is a greater value)? 1 p *Hint: The future value of Option Bis $1.800 since you expect to receive $1,800 one year from now. FV of Option A- FV of Option - Use discounting to determine PV of Option B. In other words, how much is a one-time payment of $1,800 received in one year worth to you today given a 5% annual interest rate: 3pts Circle which option should you choose based on the PV? (i.e. Which one is a greater value)? 7 p *Hint: The present value of Option A is $1,200 since you can walk out with $1.200 today PV of Option A- PV of Option B