You just received an insurance settlement offer related to an accident you had five years ago. The offer gives you a choice of one of the following three offers:
• OPTION A: $2000 per end of each month for 5 years
• OPTION B: $1400 per beginning of each month for 7 years
• OPTION C: $2300 per end of each month for 4 years
If you can earn 8% annual rate with monthly compounding on your investments, which option would you choose?
A. Option A is the best choice because it has the highest present value.
B. You are indifferent between option A and B as they both have equal values and higher than option C.
C. You are indifferent to the three options as they are all equal in value.
D. Option C is the best choice because it has the highest present value.
E. Option B is the best choice because it has the highest present value.
