Nelson Company Owes Money to Nash Company for the Purchase

Multiple Choice

Nelson Company owes money to Nash Company for the purchase of equipment. Nash Company has given Nelson the following payment options:
I. Immediate payment in full of $38,000.
II. Annual payments of $15,000 made at the end of each of the next three years.
III. A single payment of $48,000 made at the end of three years.
Assume that both Nelson and Nash use a 10% interest rate compounded annually. What option would Nash prefer, and what is the present value of that option?

A) Option I, $34,542.
B) Option I, $38,000.
C) Option II, $37,305.
D) Option III, $34,164.
E) Option III, $36,048.