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options are (scenario 1, scenario 2, scenario 3) (highest or lowest)
options are (scenario 1, scenario 2, scenario 3) (highest or lowest)
Data tables are below.
Your grandmother would like to share some of her fortune with you. She offers to give you money under one of the following scenarios (you get to choose): 1. S7,250 a year at the end of each of the next 7 years 2. $49,650 (lump sum) now 3. $98,150 (lump sum) 7 years from now Calculate the present value of each scenario using a 6% interest rate. Which scenario yields the highest present value? Would your preference change if you used a 12% interest rate? (Click the icon to view the present value annuity table.) (Click the icon to view the present value table.) (Click the icon to view the future value annuity table.) (Click the icon to view the future value table.) Using a 6% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value Scenario 1 Scenario 2 Scenario 3 Which scenario yields the highest present value? appears to be the best option. Based on a 6% interest rate, its present value is the Using a 12% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value Scenario 1 Scenario 2 Scenario 3 = appears to be the best option. Based on a 12% interest rate, its present value is the v Future Value of Annuity of $1 - X i Present Value of Annuity of $1 Future Value of $1 -X Present Value of $1 - X Future Value of $1 Periods 6% Period 1 1.060 1 1 2 Present Value of Annuity of $1 Period 6% 8% 10% 12% 1 0.943 0.926 0.909 0.893 2 1.833 1.783 1.736 1.690 3 2.673 2.577 2.487 4 3.465 3.312 3.170 3.037 5 4.212 3.993 3.791 3.605 1.124 2 Future Value of Annuity of $1 Period 6% 8% 10% 12% 1 1.000 1.000 1.000 1.000 2 2.060 2.080 2.100 2.120 3 3.184 3.246 3.310 3.374 4 4.375 4.506 4.641 4.779 5 5.637 5.867 6.105 6.353 6 6.9757.336 7.716 8.115 2.402 8% 10% 12% 1.080 1.100 1.120 1.166 1.210 1.254 1.260 1.331 1.405 1.360 1.464 1.574 1.469 1.611 1.762 1.587 1.772 1.974 3 1.191 3 4 1.262 4 5 Present Value of $1 6% 8% 10% 12% 0.943 0.926 0.909 0.893 0.890 0.857 0.826 0.797 0.840 0.794 0.751 0.712 0.792 0.735 0.683 0.636 0.747 0.681 0.621 0.567 0.705 0.630 0.564 0.507 0.665 0.583 0.513 0.452 0.627 0.540 0.467 0.404 0.592 0.500 0.424 0.361 0.558 0.463 0.386 0.322 1.338 5 6 4.355 6 1.419 4.917 5.582 4.111 4.564 7 8.394 8.923 9.487 10.089 4.623 5.206 5.747 7 6 4.868 7 7 1.504 8 7 8 6.210 5.335 4.968 8 1.594 9 8 9 1.689 1.714 1.949 2.211 1.851 2.144 2.476 1.999 2.3582.773 2.159 2.594 3.106 3.172 4. 177 5.474 4.661 6.728 9.646 9.897 10.637 11.436 12.300 11.491 12.488 13.579 14.776 13.181 14.487 15.937 17.549 23.276 27.152 31.772 37.280 9 10 6.802 7.360 6.247 6.710 5.759 6.145 5.328 5.650 10 9 10 1.791 10 15 15 2.397 20 36.786 45.762 52.275 72.052 20 3.207 Print Done Print Done Print Done Print Done
