You are presented with two options: Option A An annual payment of $1,000 for three years at the end of each year, and $1,200 for an additional ten years starting at the end of the fourth year. Option B A one-time lump- sum payment of $10,000 at the end of the first year.

A. If the annual interest rate is 5%, which option would you prefer?

B. Consider the cash flows of option A minus Option B (i.e each year compute the difference in the cash flows between the two investments). Use a data table to compute the NPV of this stream of cash flows for interest rates ranging from 0% to 12%

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