Question: you are considering two investment options in option a you...
You are considering two investment options. In option A, you have to invest $4,500 now and $1,200 three years from now. In option B, you have to invest $3,700 now, $1,700 a year from now, and $1,100 three years from now. In both options, you will receive four annual payments of $2,100 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 8% interest? Assume that all cash flows occur at the end of a year.
(a) The conventional payback period for option A is______ years. (Round to the nearest whole number place.)