You borrow $500 from the bank at 5% annual interest rate (compound) for three years. You have two payback options .

Option 1: Receive $25 year 1 Receive $50 year 2, Pay $658 in year 3

Option 2: Receive $500 today and payback $578.81 in year 3.

Please answer the following

a) What are the receipts and deposits of each option1 and option 2?

b) What is the interest paid on each option1 and option 2?

c) What is the present worth of option 1?

d) What is the present worth of option 2?

e) What is the future worth of option 1?

f) What is the future worth of option 2?

g) What is the best option?