QUESTION 7& 8

You just received an insurance settlement offer related to an accident you had four years ago. The offer gives you a choice of one of the following three offers: Option A: $6, 500 on the first day of each year for 40 years Option B: $7, 600 on the end of each year for 25 years Option C: $75,000 as a lump sum payment today You can earn 8.75 percent on your investments. Which one of the following statements is correct given this information? a. Option C is the best choice since you can cam 8.75 percent on the entire lump sum starting immediately. b. Option B is the best choice since it offers the largest annual payments. c. Option A is the best choice since it has the largest present value. d. Option B is the best choice since it has the largest present value. You are indifferent to the three options as they are all equal in value to you