Note: Use MS Excel spreadsheet to answer the following questions. Watch the YouTube

video posted on Blackboard on How to calculate Present value using Excel.

I Suppose you want to join a Gym Club, and you are presented with three payment options.

Option I requires an immediate payment $($upfront payment$)$ of $$350$ for a $5-$month membership.

Option II involves an immediate payment $($upfront payment$)$ of $$100,$ followed by payments of $$85,$

$$75,$$$65,$ and $$50$ made at the beginning of the subsequent four months.

Option III involves an immediate payment $($upfront payment$)$ of $$100,$ followed by payments of $$85,$

$$75,$$$65,$ and $$50$ made at the end of the subsequent four months.

All three options have a duration of $5$ months. People usually join Gym Clubs for various reasons,

including socializing opportunities and access to high$-$quality equipment. Now, you are faced with the

decision between these three options. Assume interest rate is $5\mathrm{.}56\%.$

Instructions:

I. Using Excel, determine the present value $($PV$)$ of each option. Create a column including all the

payments as indicated below. In each cell and for each year, you must type the present value formula

used so that your work can be verified and tracked; then generate the sum or total which represents

the present value of the corresponding option.

II$.$ Use the built$-$in Present Value $($PV$)$ or Net Present Value $($NPV$)$ formulas in excel to answer the

same question $($refer to the YouTube video posted on Blackboard$).$ Provide your response using a

similar table format as the own shown above, with tractable formulas entered in each cell.

III. Which option is preferable in present value terms? Clearly explain your choice in a few sentences.