A lottery prize gives the winner a choice between

(1) $10,000 now and another $10,000 in 5 years

(2) Four $6000 payments now and in 5, 10, and 15 years.

a. Which alternative should the winner choose if money can earn 3% compounded annually? In current dollars, what is the economic advantage of the preferred alternative?

b. Which alternative should the winner choose if money can earn 8.5% compounded annually? In current dollars, what is the economic advantage of the preferred alternative?