You are comparing two investment options, each of which will provide $15,000 of total income. Option A pays five annual payments starting with $5,000 the first year followed by four annual payments of $2,500 each. Option B pays five annual payments of $3,000 each. Which one of the following statements is correct given these two investment options?
A) Both options are of equal value today.
B) Given a positive rate of return, Option A is worth more today than Option B.
C) Option B has a higher present value than Option A given a positive rate of return.
D) Option B has a lower present value than Option A given a zero rate of return.
E) Option A is preferable because it is an annuity due.
B) Given a positive rate of return, Option A is worth more today than Option B.
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