b

Suppose that Gilberto just won the lottery and must choose between three award options: 1. A lump sum of $30,000,000 received today 2. 15 end-of-year payments of $3,750,000 3. 40 end-of-year payments of $2,700,000 Assume the interest rate is 8.00%, entered as 3 on your financial calculator. Note: Take the absolute value of the present value when answering this question. Using a financial calculator yields a present value for option 2 of approximately $32,095,045.08 and a present value for option 3 of approximately (When the Interest rate is 8.00%). Based on this, Gilberto should choose option if he seeks to maximize present value. Now assume the interest rate is 9.00%, entered as 9 on your financial calculator Note: Take the absolute value of the present value when answering this question Using the table you just filled out and a financial calculator, yields a present value for option 2 of approximately and a present value for option 3 of approximately (when the interest rate is 9.00%). Based on this, Gilberto should choose option if he seeks to maximize present value Assume the interest rate is 10.00%, entered as 10 on your financial calculator Note: Take the absolute value of the present value when answering this question, Using the table you just filled out and a financial calculator, yields a present value for option 2 of approximately and a present value for option 3 of approximately (when the interest rate is 10.00%). Based on this, Gilberto should choose option If he seeks to maximize present value attractive, relative to option 1 As the interest rate increases, options 2 and 3 become