Options for b (option 1,option 2, option 3)

Options for c are list as following (at any point in time, or only at the future time, or only at the present point in time) (at the same point in time,or at the present point in time, or at the future point in time) (differs if , or is the same regardless of whether) (all, most of the) (different, the same) (different, the same)

Data tables below

a Compare the lottery payout options given below at their future value 9 years from now. (Click the icon to view the lottery payout options.) Using a 6% interest rate, what is the future value of each payout option? b. Rank your preference of payout options. Does computing the future value rather than the present value of the options change your preference of payout options? Explain. E (Click the icon to view the future value table.) (Click the icon to view the future value annuity table.) E (Click the icon to view the present value table.) (Click the icon to view the present value annuity table.) c. a. Using a 6% interest rate, what is the future value of each payout option? Compute the future value of each payout option. (Round your answers to the nearest whole dollar.) Future value Option 1 Option 2 Option 3: b. Rank your preference among payout options. most preferable next preferable least preferable C. Does computing the future value rather than the present value of the options change your preference between payout options? Explain. using the same interest rate. The preference among the options We can make a valid comparison between the payout options as long as we convert each payment option to its value we compare the options at their present values or at their future values. Valid comparisons can be made among options at any point in time, as long as we convert V cash flows to point time using interest rate. Data Table - X Data Table - X mnd - X More Info h2 Present Value of $1 8% 10% Period 6% 12% Period 8% 12% ption 1 0.943 0.926 0.909 1 1.120 n to Option #1: $1,000,000 now Option #2: $154,000 at the end of each year for the next 9 years Option #3: $1,500,000 9 years from now 2 0.890 0.826 2 1.254 0.893 0.797 0.712 0.636 0.857 0.794 con 3 0.840 3 1.405 0.751 0.683 4 0.792 0.735 4 1.574 Future Value of $1 6% 8% 10% 1.060 1.080 1.100 1.124 1.166 1.210 1.191 1.260 1.331 1.262 1.360 1.464 1.338 1.469 1.611 1.419 1.587 1.772 1.504 1.714 1.949 1.594 1.851 2.144 1.689 1.999 2.358 1.791 2.159 2.594 Print Done 5 0.681 0.621 0.567 5 1.762 0.747 0.705 6 0.630 0.564 0.507 6 1.974 7 0.665 0.583 0.513 0.452 7 2.211 8 0.627 0.540 0.467 8 2.476 0.404 0.361 9 0.500 0.424 9 0.592 0.558 2.773 3.106 10 0.463 0.386 0.322 chall 10 using the same interest rate. The preference among the options alues Print Done Print Done A Data Table - X Data Table - X cions e lot te, of pa iture ne ful Period 12% 1 Present Value of Annuity of $1 6% 8% 10% 0.943 0.926 0.909 1.833 1.783 1.736 2.673 2.577 2.487 12% 0.893 1.690 2.402 yout op table.) uity tabl Period 1 1.000 2 Future Value of Annuity of $1 6% 8% 10% 1.000 1.000 1.000 2.060 2.080 2.100 3.184 3.246 3.310 4.375 4.506 4.641 ne pr 2 2.120 3 3 y pa 4 3.465 3.312 3.170 3.037 3.374 4.779 4 le 5 4.212 3.993 3.791 3.605 5 5.637 5.867 6.105 6.353 6 4.355 e 4.917 5.582 6 7.336 8. 115 7 4.623 5.206 5.747 4.868 6.975 8.394 7.716 9.487 7 8.923 10.089 le 8 6.210 5.335 4.111 4.564 4.968 5.328 5.650 8 9.897 10.637 11.436 12.300 9 6.247 5.759 6.802 7.360 9 11.491 12.488 13.579 alue 10 6.710 6.145 ayout od 14.776 17.549 10 13.181 14.487 15.937 on b hvert ead st rate. The Print Done Print Done e am s to