As the winner of a breakfast cereal competition, you can choose between the prizes listed below. If the interest rate is 12 percent, which prize is the most valuable?
1. $100,000 now.
2. $195,000 at the end of five years.
3. $11,400 a year forever.
4. $19,000 each year for 10 years.
5. $6,500 next year and increasing by 5 percent a year forever.