Nick just won the lottery and must choose between three award options: For each option in the table, indicate which values to enter for each variable in your financial calculator. Assume the interest rate is 8.00%, entered as 8 on your financial calculator. Note: Take the absolute value of the present value when answering this question. Using the table you just filled out, alona with a financial calculatoc, yields a present value for option 2 of approximately and a present value for option 3 of approximately (when the interest rate is 8.00% ). Based on this, Nick 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, along with your financial calculatoc 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, Nick 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, along with your financial calculatoc, 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, Nick should choose option if he seeks to maximize present value. As the interest rate increases, option 1 becomes attractive. Step 3: Practice: Evaluating Lump Sums and Annuities Now it's time for you to practice what you've learned. Suppose that Nick just won the lottery and must choose between three award options: 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 and a present value for option 3 of approximately (when the interest rate is 8.00%) ). Based on this, Nick 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, Nick 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, Nick should choose option if he seeks to maximize present value. As the interest rate increases, options 2 and 3 become attractive, relative to option 1
