2. Economics
3. you are considering two investment options in option a you...

# Question: you are considering two investment options in option a you...

###### Question details

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.)