Assume that your grandmother wants to give you generous gift.She wants you to choose which one of the following sets of cash flows you would like to receive:

Option A:Receive a one-time gift of $ 10,000 today.

Option B:Receive a $1400 gift each year for the next 10 years.The first $1400 would be received 1 year from today.Option C:Receive a one-time gift of $17,000 10 years from today.

Compute the Present Value of each of these options if you expect the interest rate to be 3% annually for the next 10 years.Which of these options does financial theory suggest you should choose?

1.Option A would be worth $__________ today.

2.Option B would be worth $__________ today.

3.Option C would be worth $__________ today.

4.Financial theory supports choosing Option _______

Compute the Present Value of each of these options if you expect the interest rate to be 6% annually for the next 10 years.Which of these options does financial theory suggest you should choose?

5.Option A would be worth $__________ today.

6.Option B would be worth $__________ today.

7.Option C would be worth $__________ today.

8.Financial theory supports choosing Option _______

Compute the Present Value of each of these options if you expect to be able to earn 9% annually for the next 10 years.Which of these options does financial theory suggest you should choose?

9.Option A would be worth $__________ today.

10.Option B would be worth $__________ today.

11.Option C would be worth $__________ today.

12.Financial theory supports choosing Option _______