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13. Angus McScrooge comes to you for financial advice. He is considering adding a downtown parking lot to his holdings. The owner of the property has given McScrooge four different payment options. Which of the following options would you recommend, and why? Remember that you are advising the buyer here. McScrooge tells you he can earn 5.8% annual interest, compounded quarterly, on his money. You have no reason to question his assumption. For each option, determine the present value of all relevant cash flows for 0.8 points each and then provide your final answer for 0.8 points (total of 4 points for this problem).

a. Option 1. Pay $35,000 today.

b. Option 2. Pay a lump sum of $39,000 at the end of two years.

c. Option 3. Pay $4,650 at the end of each quarter for two years.

d. Option 4. Pay $5,000 immediately plus $34,000 in a lump sum two years from now.

e. Which option do you recommend, and why?