After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $35 million. You have three options. (a) Receive $1.75 million per year for the next 20 years. (6) Have $11.75 million today. te) kave $3.5 million today and receive $1,450, eee for each of the next 20 years. Your financial adviser tells you that it is reasonable to expect to earn 12 percent on investments, Required: 1. Calculate the present value of each option. (Future Value of $1. Present Value of $1. Future Value Annuity of $1. Present Value Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar. Enter you answers in dollars, not in millions.) Present Value Option Option B Option 2. Determine which option you prefer Option A Option Prey Next Present Value of $1 Periods SN 6N 7N 10N NIT 14% 16% ZEN 4% 0.962 0.925 0.889 0.855 0.822 0.925 0.857 0.794 0.135 2 3 4 5 1060 180 0.326 123 0.93 0.297 0712 0.872 0.769 0.675 0.592 0.519 0.862 0.743 0.641 0.552 0.475 17% 0.855 0.731 0.624 0.534 0.456 0.713 13N 0.885 0.783 0.593 0.513 0543 0.480 0.425 0.375 0.331 0.295 0.731 0.559 0.593 0.535 0.482 0.434 0.391 02352 0.790 0.567 0.507 0,452 0,404 011 18 0.847 0.218 0.609 0.516 0.437 0.370 0.314 0.266 0.225 0.191 0390 7 0.610 0.354 15% 0.870 0.756 0.658 0.572 0.497 0.432 0,876 0.327 0.784 0.247 0.215 0.187 0.163 0.141 0.121 SECO TOTO SSTO 6 0.917 0.809 0.842 0.772 0.751 0.700 0,63 0650 0.521 0.595 0.564 0547 0.513 0503 0.067 0.450 0.424 0.422 0.386 0.388 0.350 0.356 0.319 0.926 0.290 0.299 0.263 0275 0.239 0.252 0.215 0.231 0.198 0 212 O 10 0.194 0.164 0.149 0122 0.317 0.286 0258 0.351 0.331 0.204 0181 0.630 OSS 0.540 0.500 0463 0.429 0.397 0.368 0.340 0.315 0.292 0.220 0.250 0.232 0.215 0199 0.184 0.170 0.260 0.731 0.703 0.676 0.650 0.625 0.01 0.577 0.555 0.534 0.513 0.4944 0.475 0.456 0.439 0.422 0.406 0.390 0.375 0.361 11 17 1) 14 15 16 17 18 19 20 21 22 0209 0.952 0903 0.935 0.907 0890 0.873 0.854 0.840 0.816 0.823 0.792 0.763 0.754 0.747 0.745 0.705 0.566 0.711 0.565 0.623 0.577 0.627 0582 0645 0.592 0564 0.614 0.555 0.508 0.5RS 0.527 0.675 0.557 0.497 0.444 0.530 0.669 0.415 0.505 0.412 388 0.481 0.412 0.458 0.394 0319 0.436 0.371 0317 0.416 0.296 0.396 0.277 0.377 0.258 0.359 0.22 0.342 0278 0.226 0296 0.262 0.211 0.310 0.247 0.197 0.295 0.233 0.184 0.281 0.220 0268 0.207 0.161 0.255 0.196 0 150 0.243 0.185 0.141 0.231 0.174 0.131 0.102 0.097 0.067 OSTO 0.456 0.400 0.151 0308 0270 0.237 0,200 0.182 0,160 0.140 0123 0108 0.095 0.003 0.023 004 0056 0.019 0.03 0.333 0.285 0243 0.208 0.178 0.152 0.130 0111 0.095 0.001 0.069 0.287 0.37 0.229 0.205 0133 0163 0146 0 130 0.116 0 104 0.093 0.263 0.227 0195 0.15% 0.145 0125 0.103 0.093 0.00 0.059 0050 0.051 0.01 0.038 0.033 0.020 0162 0.137 0.116 0.01 0.01 0.000 0.051 0043 0102 17% 20% 22N 20N 25% 0.8.40 0.833 0.826 0.820 0.813 0.806 0.800 0.706 0.69 0583 0.672 0.661 0.550 0.600 0.593 0579 0.564 0.551 0.537 0.524 0.512 0.499 0.482 0.457 0.451 0437 0.423 0.410 0.419 0.402 O 386 0370 0.355 0.341 0.328 0.352 0335 0.319 0303 0.289 0.275 0.262 0.296 0.279 0.263 0.249 0222 0.210 0.249 0.231 0.218 0.201 0179 0.168 0.209 0.194 0.180 0.167 0.14 0.194 0.176 0.182 0.149 0.137 0.125 0.116 0.107 0.148 0.135 0.123 0 112 0.103 acu 0086 0.124 0.112 0.102 0.092 0.083 0,076 0.069 0.100 0.033 0086 0.075 0.068 0.051 0.055 0.083 0.07 0.069 0.062 0.055 0049 0044 0.074 0.005 087 0.051 0.015 0.040 0.035 0.052 0.0544 0.017 0012 0.036 0.032 0.028 0.052 0045 0.039 0,034 0.030 0.025 0.023 0044 0012 0.02 0024 0.001 001 0.037 0.031 0.022 0.023 0.000 0.014 0031 0:026 0.022 0.019 001s 0.012 0.006 0.022 0.012 0.015 0.018 0013 0.009 0.022 0.010 0.015 0.013 0.011 0.000 0.007 0.010 0.015 0.012 0.010 0.009 0.0012 0.006 DOIS 0.013 0.010 0.00 0.007 0.006 0.005 0.013 0.010 0.009 0.007 0.006 0.DOS 0.004 0.011 0.009 0.007 0.006 0.005 0.000 0.003 0.000 0.007 0.006 0.005 0.000 0.003 0.002 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.005 0.005 0.004 0.003 0.002 0.002 0.002 0.005 0.004 0.003 0.003 O.CO2 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.093 0.01 0.059 OLBB 0.170 0.153 0.138 0.124 0.112 0.101 0.091 0,082 0.074 OSED TEE ZIED 0.010 1620 0.154 0.150 SENARA ARAX 9 0.125 0.111 DOW 0.087 0077 0.06 0.060 0.053 0.047 0,051 0.05 0.016 0.010 0.035 0.030 0.074 0.066 0.051 0.041 007 0.032 0.027 0.023 0.020 0.017 0.001 0.025 0.022 0.019 0.016 6500 0.014 26 27 0.172 0135 0.128 0 112 0102 0.022 0.084 0.075 0.069 0.063 0.057 0.022 0.15 0.13 0.125 0.115 0107 0.009 LEO LEED 0.126 0.116 0.106 0.098 0.090 0082 0.075 0.032 0.066 0.050 0.054 0.048 0.014 0.053 0.047 0.012 0014 0.042 0.037 0.033 0.029 0.026 0.321 0108 6.200 0033 0.029 0.026 0022 0.020 0.005 0.023 0.020 0.017 0.015 ZEOD 0021 0.015 0016 0.014 0.012 0.003 0.012 0.011 0.009 0.002 0.014 0.011 0.010 0.008 0.007 0.001 40 0.045 OOLS ODOB 0.004 0.000 Accounting Rate of Return = Net Operating Income / Initial Investment Present Value of an Annuity of $1 in Arrears Periods 6 1 12N 18 19% 21 22N 23 25 1759 3 4 5 0.83 1.650 2.600 30 6 0.947 1565 2.174 2.60 3.127 3.498 3.812 4.078 303 20N 0.833 1.528 2. 106 2589 2.991 3.126 3.505 ERRY 4.031 10N 0.09 1.716 2.47 1.170 3.791 4ass 4.358 5.115 5,759 5.145 6.495 6814 7.103 7.157 166 7 0.813 1.474 2011 2.468 2.803 3.092 3.327 1.518 1.675 1547 2.140 2.639 2058 3.410 3.705 3.954 4.163 4,339 4.456 4611 4,715 RED W. 07 6 OT 0.301 171 2444 3.102 3.696 4231 4.712 5.145 5517 5.29 6.207 6.492 6.750 692 7.191 7.319 7.549 7.702 7. 7.963 US 1.178 0.800 1.440 1.952 2162 2.689 2.951 3.161 3.329 3.469 8571 3.656 1.GOS 4111 4.554 4. 5.122 5.650 595 194 6.474 6. 5311 4N 5% TN EN 0.962 0.952 0.90 0.935 0.926 0.917 1.888 1.859 1833 1.808 1.783 2.775 2.723 2.673 2.624 2.577 2511 3.630 3.545 3.455 3.387 2312 3.260 4.452 4329 4.212 4,100 3.995 3.890 5.242 5.076 4917 4767 4623 4.486 6,002 5.786 5.582 5.389 5 206 5.033 6.733 6.463 6.210 5.971 5.747 5535 7.435 7.108 5.802 6515 6.247 5.995 7.722 7.350 7.024 6.710 6418 8.760 8.306 7.887 7.499 7.139 6.05 9.385 8.354 7.943 7536 7.161 9.986 9.394 8.53 8.353 7.300 7.487 10 563 9.699 9.195 8.765 2244 7785 11111 10:18 9.712 9.100 3559 061 11,652 10.538 10106 9.447 8851 3313 12.16 11.274 10 417 9.763 9.122 2544 12.659 11. 10 828 10.09 9.72 &756 131M 12085 11 15 10336 1.601 5950 11 O 12 462 LATO 1054 9318 129 14.025 12 11.764 10.07 14 451 13.161 17.012 11.061 10.201 9412 14.057 11.489 12.303 11.272 10 171 9.50 15.27 1.799 12.550 114 10 529 9,707 15.622 14.094 12.7811654 10.67 OM 15.3 14.375 13.003 11826 10.810 9.939 16,130 1464 13.211 11.987 10.15 10.027 16.663 14. 13.406 12.137 11.051 10.136 16.984 15.141 18.591 12.27 11158 10 198 17.292 15372 13.15 12.409 11258 10.274 19.793 17.159 15.045 13.312 11.925 10.757 11 12 13 14 15 0.806 1.457 1941 2.404 2.745 3020 3.242 1421 3.556 3.682 1776 3.851 3.912 3.962 4.001 3725 1.502 3.985 4053 4100 4.153 3.780 3.824 IN 1 15N 10N 17N 0.885 OKTY 0.370 0.852 0.855 1.561 167 1626 1.605 1.585 2.161 2.122 2.253 2.245 2210 2.974 2.914 2.855 2.79 3.517 3431 3.352 1.274 1.199 3998 189 3.784 3.885 3.589 4413 4.150 4.02 4639 4482 434 4.207 5112 4772 GOT 4 451 5.06 5.216 5019 1.833 5.67 1.451 3.234 5.029 4136 5.918 5.40 5.421 5297 4352 5132 5. 5.583 5.342 5.118 5.30) 5002 5.724 5.48 5.229 610 5.17 5.575 5.124 265 5954 5.668 S405 6.72 6373 6047 5. $475 6.840 62 5128 5.18 5514 591 690 198 5872 5554 7025 1 6.259 5999 5628 7.100 6.112 973 6S 7170 6 6011 S. 7210 6.199 6044 5.720 72596835 44 073 5. 7310 NTS 6.466 6097 5.766 7.372 306 1491 61 7400 6514 16 5.98 6951 51 5.810 7470 6983 6551 6.166 5.30 7.496 7.003 6564 61 5.829 ZAH Z.105 5642 6974 16 17 1 19 4.656 4793 4910 5.000 5.0X2 5.162 5.222 5.273 5.316 5.153 6.60 7.324 1022 301 4327 4.419 4533 4.611 4575 4.730 4.775 4.R12 4.143 4870 4. A 4.900 0.826 0.820 1.509 1.492 2074 2.042 2.540 2.494 2.925 2.864 3.245 3.167 3 SON 2416 1.726 3.619 3.905 3.786 4054 177 4.035 4278 4177 6.362 4.203 4412 4265 4.49 4536 152 4576 4.191 4508 4.419 4635 4.442 4.657 4450 4.675 4.4 4.0 4499 47 4107 4.721 4.514 4728 4520 4.714 4.524 4.739 4528 4.748 4531 4765 M 4.160 454 4 119 4.219 4.059 4,080 4,097 7.120 7.250 7.366 2.410 7.561 7.64 7.78 7.74 70 3.887 3.910 3.928 3.942 1.954 SOE DIS 4.263 4.279 110 OS 106 22 23 24 5.410 5432 5.45 4.376 4918 co 5.083 5.070 5.101 5.122 5.149 5.167 5.157 5.195 5.206 $215 5.223 5.229 5235 53 4102 4.111 . 1.712 . 2.955 9077 161 9.217 9.07 370 4123 4 1 112 TER w 2.14 3.42 84 R.548 1.402 3.850 5.694 3951 5.410 5.092 26 27 25 29 30 7. 7 7.064 10:22 ROSS 19 3.70 3.976 3.0 3. 1.08 10 3.992 1. 4932 4.94 4956 1.964 4.970 4.975 4979 5.510 5.517 4.147 4151 4.150 4157 4159 4 100 166 4.35 4017 4139 244 9779 40 5548 4.142 1.999