9. Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): (Click the icon to view the scenarios.) 2(Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) 4(Click the icon to view Future Value of $1 table.) (Click the icon to view Future Value Ordinary of Annuity of $1 table.) Read the requirements Requirement 1. Calculate the present value of each scenario using a 6% discount rate. Which scenario yields the highest present value? Round to the nearest dollar. Begin by calculating the present value of each scenario using a 6% discount rate. (Round the amounts to the nearest dollar.) Present Value Scenario 1: Scenario 2: Scenario 3: ( 14 appears to be the best option. Based on a 6% discount rate, its present value is the (2) Requirement 2. Would your preference change if you used a 12% discount rate? Begin by calculating the present value of each scenario using a 12% discount rate. (Round the amounts to the nearest dollar.) Present Value Scenario 1: Scenario 2: Scenario 3: Using a 12% discount rate (3) - change the preference in this problem. 1: More Info 1. 2. 3. $8,750 per year at the end of each of the next six years $49,650 (lump sum) now $100,450 (lump sum) six years from now 2: Reference Periods 6% 0.943 0.890 0.840 0.792 0.747 0.705 12% 0.893 0.797 0.712 0.636 0.567 0.837 0.665 0.789 0.270 1% 2% 3% 0.990 0.9800.971 0.980 0.951 0.943 0.971 0.942 0.915 0.961 0.924 0.888 0.951 0.906 0.963 0.942 0.888 0.933 0.871 0.923 0.853 0.914 0.837 0.905 0.820 0.744 0.896 0.804 0.722 0.887 0.789 0.701 0.879 0.773 0.681 0.870 0.758 0.661 0.861 0.743 0.642 0.853 0.728 0.623 0.844 0.714 0.836 0.700 0.587 0.686 0.570 0.820 0.673 0.554 0.811 0.660 0.538 0.803 0.647 0.522 0.795 0.634 0.507 0.788 0.622 0.492 0.780 0.610 0.478 0.772 0.598 0.464 0.764 0.586 0.450 0.757 0.574 0.437 0.749 0.563 0.424 0.742 0.412 0.672 0.453 0.307 0.60B 0.372 0.228 4% 5% 0.962 0.952 0.925 0.907 0.8890.864 0.855 0.823 0.822 0.784 0.790 0.746 0.760 0.711 0.731 0.677 0.703 0.645 0.676 0.814 0.650 0.585 0.625 0.557 0.601 0.530 0.577 0.505 0.555 0.491 0.534 0.458 0.513 0.436 0.494 0.416 0.475 0.396 0.456 0.377 0.439 0.359 0.422 0.342 0.406 0.326 0.390 0.310 0.375 0.295 0.361 0.281 0.347 0.268 0.333 0.255 0.321 0.243 0.308 0.231 0.208 0.142 0.141 0.097 Present Value of $1 7% 8% 9% 10% 0.935 0.926 0.9170.909 0.873 0.8570.842 0.826 0.816 0.794 0.772 0.751 0.763 0.735 0.708 0.683 0.713 0.681 0.650 0.621 0.666 0.630 0.596 0.564 0.623 0.583 0.547 0.513 0.582 0.540 0.502 0.467 0.544 0.500 0.460 0.424 0.500 0.463 0.422 0.336 0.475 0.429 0.388 0.350 0.444 0.397 0.356 0.319 0.415 0.368 0.326 0.290 0.388 0.340 0.299 0.263 0.362 0.315 0.275 0.239 0.339 0.292 0.252 0.218 0.317 0.270 0.198 0.296 0.180 0.277 0.232 0.194 0.164 0.258 0.215 0.178 0.149 0.242 0.1990.1640.135 0.226 0.184 0.150 0.123 0.211 0.170 0.138 0.112 0.197 0.158 0.126 0.102 0.184 0.146 0.116 0.092 0.172 0.135 0.106 0.084 0.161 0.125 0.076 0.150 0.116 0.090 0.069 0.141 0.107 0.082 0.131 0.099 0.075 0.067 0.046 0.032 0.022 0.034 0.021 0.013 0.009 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 0.394 0.371 0.350 0.331 0.312 0.294 0.278 0.262 0.247 0.233 0.220 14% 15% 16% 0.877 0.870 0.862 0.769 | 0.756 0.743 0.675 0,658 0.641 0.592 0.572 0.552 0.519 0.497 0.476 0.456 0.432 0.410 0.400 0.376 0.354 0.351 0.327 0.305 0.308 0.284 0.263 0.247 0.227 0.237 0.215 0.195 0.208 0.187 0.168 0.182 0.163 0.145 0.160 0.141 0.125 0.140 0.123 0.108 0.123 0.107 0.093 0.093 0.080 0.069 0.083 0.070 0.060 0.073 0.051 0.051 0.064 0.053 0.044 0.056 0.046 0.038 0.049 0.040 0.033 0.043 0.035 0.028 0.038 0.030 0.024 0.033 0.025 0.021 0.029 0.023 0.018 0.026 0.0200.016 0.022 0.017 0.014 0.020 0.015 0.012 0.005 0.004 0.003 0.001 0.001 0.605 18% 20% 0.847 0.833 0.7180.694 0.609 0.579 0.516 0.482 0.437 0.402 0.370 0.335 0.314 0.279 0.266 0233 0.225 0.194 0.191 0.162 0.162 0.135 0.137 0.112 0.116 0.093 0.099 0.078 0.084 0.065 0.071 0.054 0.060 0.045 0.051 0.038 0.043 0.031 0.037 0.026 0.031 0.022 0.026 0.018 0.022 0.015 0.019 0.013 0.0160.010 0.014 0.009 0.011 0.007 0.010 0.006 0.005 0.007 0.004 0.001 0.001 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146 0.130 0.116 0.104 0.093 0.083 0.074 0.066 0.069 0.053 0.047 0.042 0.231 0.212 0.095 0.081 0.828 0.098 0.037 0.008 0.552 0.196 0.185 0.174 0.097 0.054 0,033 0.003 0.001 3: Reference Periods 16% 0.862 1.605 2.246 2.798 3.274 18% 0.847 1.586 2.174 2.690 3.127 20% 0.833 1.528 2.106 2.589 2.991 3.498 3.812 4.078 4.303 12% 0.893 1.690 2.402 3.037 3.605 4.111 4.564 4.968 5.328 5.650 5.938 6.194 6.424 6.628 6.811 6.974 7.120 7.250 7.366 Present Value of Ordinary Annuity of $1 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 1.970 1.942 1.913 1.888 1.859 1.8331.808 1.783 1.759 1.736 2.9412.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 4.853 4.713 4.580 4.452 4.329 | 4.212 4.100 3.993 3.890 3.791 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 8.728 6.472 6.230 8.002 5.786 5.582 5.389 5.206 5.033 4.169 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 9.471 8.983 | 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 11.255 10.575 9.954 9.3858.8638.384 7.943 7.536 7.161 6.814 12.134 11.348 10.635 9.9869.394 8.853 8.358 7.904 7.487 7.103 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 13.865 12.849 11.938 11.118 10.380 9.712 9.106 8.559 8.061 7.606 14.718 13.578 12.561 11.652 10.83B 10.106 9.447 8.851 8.313 7.824 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 17 226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 18.046 16.351 14.877 13.590 12.462 11.470 10.5949.818 8.514 18.857 17.011 15.415 14.029 12.821 | 11.764 10.836 10.017 9.292 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.201 20.456 18.292 16.444 14.857 13.489 12.303 11.272 10.371 9.580 2124318.914 16.936 15.247 13.799 12.550 11.469 10.529 22.023 19.523 17.413 15.622 14.094 12.783 11.654 10.675 9.823 9.077 22.796 20.121 17.877 15.983 14.375 13.003 11.828 10.810 9.929 23.560 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 9.237 24.316 21.281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 25.066 21.844 19.18 16.984 15.141 13.591 12.278 11.158 10.198 9.370 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10 274 9.427 32.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 39.196 31.424 | 25.730 21.482 | 18.256 15.762 13.801 | 12.233 10.962 9.915 15% 0.870 1.826 2.283 2.855 3.352 3.784 4.160 4.487 4.772 5.019 5.234 5.421 5.583 5.724 5.847 5.954 6.047 6.128 6.199 6.259 4.656 4.793 4.910 5.008 14% 0.877 1.647 2.322 2.914 3.433 3.889 4.2BB 4.639 4.946 5.216 5.453 5.660 5.842 6.002 6.142 6.265 6.373 6.467 6.550 6.623 6.687 6.743 6.792 8.835 6.873 8.908 6.935 6.961 6.983 7.003 7.105 7.133 3.685 4.039 4.344 4.607 4.833 5.029 5.197 5.342 5.468 5.575 5.669 5.749 5.818 5.877 5.929 5.092 Baco 5.162 5.222 5.273 5.316 3.326 3.605 3.837 4,031 4.192 4.327 4.439 4.533 4.611 4.675 4.730 4.775 4.812 4.844 4.870 4.891 4.909 4.925 4.907 4.948 4.956 4.964 4.970 4.975 4.979 4.997 9.129 6.359 5.410 5.432 9.702 7.562 7.645 7.718 7.784 7.843 7.896 7.943 7.984 8.022 8.055 8.244 8.304 6.399 6.434 6.464 6.491 6.514 6.534 5.451 5.467 5.480 5.492 6.073 6.097 6.11B 6.136 6.152 6.166 6.177 6.233 6.246 6.551 6.566 6.642 6.661 5.517 5.548 5.554 4.999 4: Reference Periods 3% 1.030 1.061 1.093 1.126 1.159 4% 1.040 1.082 1.125 1.170 1.217 5% 1.050 1.103 1.158 1.216 1 276 Future Value of $1 6% 7% 1.060 1.070 1.1241.145 1.191 1.225 1.262 1.311 1.338 1.403 8% 1.080 1.166 1.260 1.360 1.469 9% 10% 1.090 1.100 1.1881.210 1.295 1.331 1.412 1.484 1.539 1.611 14% 1.140 1.300 1.482 1.689 1.925 15% 1.150 1.323 1.521 1.749 2.011 1.419 1% 1.010 1.020 1.030 1.041 1.051 1.062 1.072 1.083 1.094 1.105 1.116 1.127 1.138 1.149 1.161 1.173 1.504 1.594 1.689 1.791 1.898 2% 1.020 1.040 1,061 1.082 1.104 1.126 1.149 1.172 1.195 1.219 1.243 1.268 1.294 1.319 1.346 1.373 1.400 1.428 1.457 1.486 1.516 1.546 1.577 1.808 1.641 1.194 1.230 1.267 1.305 1.344 1.384 1.426 1.469 1.513 1.558 1.605 1.653 1.702 1.754 1.806 1.340 1.407 1.477 1.551 1.629 1.710 1.796 1.886 1.990 2012 1.265 1.316 1.369 1.423 1.480 1.539 1.601 1.665 1.732 1.801 1.873 1.948 2.026 2.107 2.191 2.1952.313 2.502 2 660 2.853 3.059 3.252 3.518 3.707 4.046 4.226 4.652 4.818 5.350 5.492 6.153 8.2817.076 7.138 2.579 8.137 B.137 2.183 2 292 1.184 12% 1.120 1.254 1.405 1.574 1.762 1.974 2.211 2.476 2.773 3.106 3.479 3.896 4.363 4.887 5.474 6.130 6.866 7.690 8.613 9.646 10.80 12.10 13.55 15.18 17.00 19.04 21.32 23.88 26.75 29.96 93.05 289.0 1.196 1.200 9.276 10.58 1.501 1.587 1.6771.772 1.606 1.714 1.828 1.949 1.718 1.851 1.993 2.144 1.8381.999 2.172 2.359 1.967 2.159 2.367 2.594 2.105 2.332 2.580 2.853 2.252 2.518 2.813 3.138 2.410 2.720 3.066 3.452 2.967 3.342 3.799 2.759 3.172 3.642 4.177 2.952 3.426 3.970 4.595 3.159 3.700 4.328 5.054 3.380 3.996 4.717 5.560 3.617 4.316 5.142 6.116 3.870 5.604 6.727 4.141 5.034 6.109 7.400 4.430 5.437 6.659 8.140 4.741 5.871 7.258 8.954 5.072 6.341 7.911 9.850 5.427 6.848 8.623 10.83 5.8077.3969.399 11.92 6.214 7.988 10.25 13.11 6.649 8.627 11.17 14.42 7.114 9.317 12.17 15.86 7.612 10.06 13.27 17.45 14.97 21.72 31.41 45.26 29.46 46.90 74.36 117.4 9.358 10.76 12.38 14.23 16.37 2.527 2.653 12.06 2.279 18 2.133 2.261 2.397 2.540 2.693 2.854 3.026 3207 3.400 3.604 3.820 4.049 4.292 4.549 4.822 5.112 5.418 5.743 10.29 1.860 1.916 1.974 2.033 2.094 21.64 1.270 1.282 1.295 1.308 2.370 2.465 2.583 2.666 2.772 2.883 2.999 3.119 3.243 4.801 7.107 2.786 2.925 3.072 3.225 3.386 3.556 3.733 3.920 4.116 4.322 7.040 11.47 15.67 17.86 20.36 23.21 26.46 30.17 34.39 1.873 1.707 1.741 1.776 1.811 2.208 2.692 2.157 2.221 2.288 2.357 2.427 3.262 4.384 1.321 1.335 24.89 28.63 32.92 37.86 43.54 50.07 57.58 66.21 267.9 44.69 50.95 189.9 700. 2 1.645 18.42 1 084 5: Reference Future Value of Ordinary Annuity of $1 5204 5.416 A.142 3.487 F50g 12.30 14.79 201 13.49 | 16.21 | 15.08 21.38 | 27.7 29.00 3.8 16.10 Perios | 1% | 138 | 4% ] 81 % | 10% 12% | 14% | 15%, 1.000 | 1.00 | 1.000 | 1.00G | LOG | 1.000 | 1. 00 1.00 | 1.000 | 1.Dea | 1.00 | 1.0be | L.COM 2010 12.020 | 2.030 2.040 | 2050 | 2.060 | 2.070 2.080 | 2.090 | 2.100 | 2.120] 2.140 | 2.150 3.030 3.0670 3.091 3.122 | 3.153 | 3.184 | 3.215 3.246 | 3.278 13.310 3.374 3.4 0 | 3473 4.060 4.122 4.134 4.246 4.310 | 4.375 4.40 | 4.506 4.573 4.641 4.779 4.921] 4.933 15.309 | 5.526 | 5.637 5.751 | 5.87 15.985 6.105 6.353 | 6.610 ] 6.742 6.328 6.468 6.633 6.802 | 6.975 | 7.153 | 7.336 | 7.523 7.716 2.115 | 6.536 | 2.754 7434 7.662 7.898 8.394 8.654 8.323 19.200 10.09 10.73 | | 1.07 8.583 8.892 9.214 9.397 | 10.260 | 10.64 1.8 11.4 13.23 | 13.3 9.755 10.16 10.56 | 11.03 | 11.49 | 1. 2.49 13.2 | 13.58 | 16.09 | | 16 10.46 | 10.5 146 | 12.58] 13.18 | 13.82 | 14.49 | 15.19 | 15.4 | 19.34 | 20.30 11.57 | 12.17 | 12.81 | 14.97 15.78 | 16.65 17.56 | 18.53 20.65 | 23.04 | 24.35 12.68 341 | | 14.19 15.32 16.87 17.89 20.14 14 | 15.62 6.63 17.71 16.88 20.14 22.95 24.52 28.03] | 32.0 | 34.35 14.95 5.7 | 17.09 21.02 255 26.02 27.98 32.9 | 37.56 0.50 7.29 | 18.60 20.02 | 21.58 23.28 | 25.13 29.35 | 31.7 37.28 | 43.84 | 47.58 18.64 | | 20.16 21.82 | 23.66 25.67 | 27.89 33.00 | 35.95 42.75 | 50.96 55.72 21.76 23.70 | 26.21 30.84 | 36.97 2.4 48.88 59.12 25.65 23.13 30.91 34.CC | 41.30 45.80 55.75 68.39 75.84 27.67 | 33.76 | 37.38 46.02 51.16 | 63.8 78.97 83.21 26.37 29.78 36.79 41.00 | 51.16 72.05 11.02 | | 102.4 39.99 | 56.76 4.0 | 104.8 | 16.3 30.54 43.39 ,87 7140 1204 1378 32.45 47.00 68.53 1.3 159.3 34.43 50.82 6.79 88.50 | 18.7 | 134.2 47.65 54.86 | 84.70 8.35 133.3 | 181.9 212.8 36.55 59.16 68.68 193.32 109.2 150.3 | 208.3 2.5.7 63.71 7448 12.7 21.1 233.5 23.5 6.53 | 113.0 134.2 190.7 272.9 327.1 | 87.35 124.1 | 148.5 | 2014.6 | 372.1 377.2 40.57 | 47.58 | | 55.08 | .4 | 79.06 | 44 | 13.3 1383] | 164.5 | 241.3 | 358.5 | 434.7 60 40 | 75.40 95.03 120.8 | 154.8 | 199.6 | 259.1 | 337.9 | 42.6 | 767.1 | 1342 | 1779 | 4.46 4.58] 2.6 152.7 | 209.3] 290.3 | 406.5 57.3.3 | 615. 1 1,164 | 2.400 | 4,995 | 7.218 65.08 6.12 24.30 %.68 31.97 44.87 8 1 36.46 25 4.31 | 51.1 47 06 168.4 8.70 3.64 | 6: Requirements 1. Calculate the present value of each scenario using a 6% discount rate. Which scenario yields the highest present value? Round to the nearest dollar. 2. Would your preference change if you used a 12% discount rate? (1) O Scenario 1 Scenario 2 Scenario 3 (2) O highest Olowest (3) O would would not O