Provide sue with financial advice on which option has the potential to yield the highest monetary value. support your rational with calculations using time value of money and comment on the risk return relationship for each option, assume interest rate on savings is 4% and is compound semi-annually.

sue is a 55 year old accountant who works at Ernst and young who is about to retire. she has the following decision to make

option a - select a lump sum gratuity payment of $120,00 with a reduced pension of $1750 per month

option b - select a monthly pension of $3000 with no lump sum gratuity payment

in addition sue has a loan of $72000 with loan payment of $1200 per month for the next five years