. Tom is considering three different investment plans--A, B, and C--that his broker has offered to him. Each plan requires the same amount of investment but provides different cash flows as follows:

End of Year A B C

1 $200 0 $500

2 200 0 0

3 200 0 0

4 200 200 500

5 0 200 0

6 0 200 0

7 0 200 0

8 0 200 500

Because Tom only has enough savings for one investment, his broker has proposed the third alternative to be, according to his expertise, the best in town. However, Tom questions his brokers recommendation and asks you for help. The required rate of return for the three investments is the same: 10%. What is Toms best alternative? Why? [Hints: Compare the PV of the future cash flows.]