The 7th Street Shop is having a contest to bring attention to its store. It is offering a $2,000 grand prize to one lucky winner. $500 will be paid on the day of the drawing. The remaining $1,500 will be paid in three annual payments of $500 each, starting one year after the drawing. How much is this prize really worth at a 7 percent rate of return?

Select one:

a. $1,812.16

b. $1,693.61

c. $1,438.76

d. $1,948.99

e. $1,122.09