Problem Four: (10%)

You have won the lottery!

You were offered two options to claim your prize:

Option One: You will collect a payment of $12,000 at beginning of each year for 10 years, then a final payment of $20,000 will be made at the end of year 10.

Option Two: You will be offered a payment of $7,000 at the end of each year for 5 years, then a payment of $8,000 at the end of each year for another 10 years.

Required: If your opportunity cost is 5%, which option should you choose?

(SOLUTION MUST BE ON EXCEL)