You are considering two investment options. In option A, you have to invest $6,000 now and $800 three years from now. In option B, you have to invest $3,100 now, $1,400 a year from now, and $1,100 three years from now. In both options, you will receive four annual payments of $2,200 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the present worth criterion, assuming 10% interest? Assume that all cash flows occur at the end of a year.

10 Single Payment Equal Payment Series Compound Present Compound Sinking Worth Amount Fund Factor Factor Factor Present Capital Amount Worth Recovery Factor Factor Factor (FIP, i, N) (P/F, i, N) (FA, i, N) (A/F, i, N) (PA, i, N) (A/P, i, N) 1.1 000 1.0000 0.9091 0.9091 1.0000 1.1000 0.4762 1.2100 0.8264 2.1000 1.7355 0.5762 3.3100 0.7513 2.4869 3310 0.302 0.4021 1.4641 3.1699 0.2155 4.6410 0.6830 0.3155 1.6105 6.105 3.7908 0.6209 0.1638 0.2638 1.7716 7.7156 4.3553 9.4872 0.5132 4.8684 1.9487 11.4359 0.0874 5.3349 0.4665 0.1874 2.1436 2.3579 0.4241 13.5795 0.0 5.7590 2.5937 0.3855 15.9374 0.0627 6.1446