You are presented with two options: Option A An annual payment of $1,000 for three years at the end of each year, and $1,200 for an additional ten years starting at the end of the fourth year. Option B A one-time lump- sum payment of $10,000 at the end of the first year. [2.25 points]

A. If the annual interest rate is 5%, which option would you prefer? [0.5 points]

B. Consider the cash flows of option A minus Option B (i.e., each year compute the difference in the cash flows between the two investments). Use a data table to compute the NPV of this stream of cash flows for interest rates ranging from 0% to 12% [in increments of 1%].

C. At what rates would you prefer Option A? At what rates would you prefer Option B? [0.25 points]

D. Use economic intuition to explain why the appeal of Option A relative to Option B depends on the interest rate. [0.5 points]

E. Compute the IRR of the difference in cash flows between Option A and Option B? What is this IRR telling you? [0.5 points]

Solve it in Excel ( Spreadsheet) and write the formula, please.