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Rana, Tarek and Samir are three Lebanese citizens who happen to have 48,000 USD stuck in Lebanese bank accounts. They are considering three available options

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Rana, Tarek and Samir are three Lebanese citizens who happen to have 48,000 USD stuck in Lebanese bank accounts. They are considering three available options to deal with the current situation: Option 1: Benefit from the latest circular issued by the Lebanese central bank (assuming it is applied) as follows: Withdraw every month for the next five years 400 USD and the equivalent of 400 USD in Lebanese Pound (LBP) at a rate of 12,000 LBP/USD. The bank will accordingly reduce the account balance by 800 USD/month. Option 2: For simplicity, let's assume that, with certainty, a person who keeps his/her bank account "frozen" for the next five years (.e. no amounts of money are retrieved from it nor added to it), will be able to withdraw the complete balance in USD at the end of the five years. Option 3: Our three friends know a "trader" who offers them to immediately accept a cheque from them in return for 25% of the cheque amount in cash USD. Assume that the exchange rate over the next five years remains constant at 20,000 LBP/USD. The profiles of our three friends are as follows: Rana is well-off. She can sustain her life in Lebanon as she has access to large amounts of cash money and has bank accounts outside Lebanon. Rana has an MARR of 0.5%/month. Tarek has trusted the Lebanese banking system too much. Now he is left almost penniless and has been unemployed for the last few months. He wants to survive the current difficult times. Therefore, option 2 is not an option for him. Assume his MARR is 1.5%/month. Samir has not yet been driven into poverty. He is not in survival mode and can still afford a basic life without necessarily tapping into the money stored in his bank account. He uses an MARR of 1%/month. a) Write the PW of each of the three options as a function of the monthly MARR b) Which option would each of Rana, Tarek and Samir choose? c) Over what range of monthly MARR would option 3 be the best option? (write down the reasoning that allows you to reach the solution and the answer)

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