Two investment options are as follows.

Choice 1: Payments of $ 2550 now, $ 3250 a year from now, and $ 4040 two years from now.
Choice 2: Three yearly payments of $ 3250 starting now.
Assume interest is compounded continuously.

(a) If the interest rate on savings were 4.63 %, which would you prefer?

Choice 1. The present value of Choice 1 is $7,068.45, while the present value of Choice 2 is $9,541.45. Therefore, Choice 1 is the better option.