Part 5 of 8 Points: 1 of 2 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. $8,250 a year at the end of each of the next eight years 2. $49,650 (lump sum) now 3. $98,650 (lump sum) eight years from now Calculate the present value of each scenario using an 8% interest rate. Which scenario yields the highest present value? Would your preference change if you used a 10% interest rate? (Click the icon to view the present value annuity factor table.) (Click the icon to view the future value annuity factor table.) (Click the icon to view the present value factor table.) (Click the icon to view the future value factor table.) Using an 8% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.) Present value of Scenario 1 $ 47,413 Present value of Scenario 2 Present value of Scenario 3 49.650 53,271 Which scenario yields the highest present value? Scenario 3 appars to be the best option. Based on an 8% interest rate, its present value is the highest. Using a 10% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar) Present value of Scenario 11 50 (lump sum) eight years from now the present value of each a the icon to view the prese Present Value of Annuity of $1 Value of Annuity of $1 iture 8% interest rate, calculate alue of Scenario 1 $ value of Scenario 2 value of Scenario 3 $ enario yields the highest pr 3 appears to be the best 10% interest rate, calculate t value of Scenano 1 S Present Value of Annuity of $1 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% 0833 1.528 2.106 Periods Period 1 0.990 0.950 0.971 0.962 0.952 0943 0.926 0909 0.893 0.877 0862 0847 Period 2 1.970 1942 1913 1856 1859 1833 1.783 1.736 1.690 1.647 1.605 1.566 Period 3 2.941 2.884 2829 2.775 2.723 2.673 2577 2.487 2402 2.322 2.246 2.174 Period 4 3.902 3.808 3.717 3630 3.546 3.465 3.312 3.170 3.037 2914 2.796 2.690 2.589 Period 5 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.005 3.433 3.274 3.127 2.991 Period 6 5.795 5.601 5417 5242 5.076 4.917 4.623 4.355 4.111 3.889 3.685 3.498 3.326 Period 7 6.728 6472 6230 6002 5.786 5582 5.206 4.868 4.564 4.288 4.009 3.812 3.605 Period 8 7652 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4.068 4.639 4.344 4.078 3.837 Period 9 8.566 8.162 7.786 7435 7.108 6802 6.247 5.750 5.328 4.946 4.607 4.303 4031 Period 10 9.471 8083 8530 8.111 7.722 7.300 6.710 6.145 5650 5216 4.833 4.494 4.192 Period 11 10.368 9.787 0.253 6760 8306 7.887 7.139 6.495 5.939 5.453 6.029 4.656 4.327 Period 12 11.255 10.575 9.954 9385 8863 8.384 7536 6814 6.194 5.660 5.197 4.793 Period 13 12.134 11.348 10.635 0.906 9.394 8.853 7504 7.103 6.424 5042 5342 4.910 4.533 Period 14 13.004 12.106 11.290 10.563 9899 9.295 8244 7347 6628 6.002 5.468 5008 4611 Period 15 13.805 12.840 11.038 11.118 10.380 9.712 8.550 7.606 6811 6.142 5.575 5092 4.675 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9318 8.514 7469 6623 5.920 5353 4.870 Period 25 22.023 10 523 17.413 15 622 14 004 12 783 10 675 9.077 7.843 6.873 6097 5.467 4948 Period 30 25 808 22.306 19 600 17.292 15.372 13.765 11.258 9427 8055 7.003 6.177 5517 4979 Period 40 32.835 27 355 23 115 19 793 17 159 15 046 11 925 9.779 8244 7.105 6233 5545 4997 4.439 Print Done ed a 10% interest rate? - X Osum) now! sum) eight years from now ant value c to view th to view th Future Value of Annuity of $1 Annuity of $1 Future Value of Annuity of $11 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 1.000 1.000 1.000 1.000 1.000 1.000 1,000 1,000 1.000 1.000 1.000 1.000 1.000 rest rate, ca Period 2 2010 2.020 2.030 2.040 2.050 2060 2.080 2.100 2.120 2.140 2.160 2.180 2.200 Period 3 3.030 3.060 3.091 3.122 3.153 3.184 3.246 3.310 3.374 3.440 3.506 3.572 3.640 Scenario 1 Period 41 4.060 4.122 4.184 4.246 4.310 4.375 4.506 4.641 4.779 4.921 5.066 5.215 5.368 Period 5 5.101 5.204 5.309 5.416 5.526 5.637 5.867 6.105 6.353 6.610 6.877 7.154 7.442 Scenario 2 Period 6 6.152 6.308 6.468 6.633 6.802 6.975 7.336 7.716 8.115 8.536 8.977 9.442 9.930 Scenario 3 Period 7 7.214 7434 7.662 Period 8 wields the hid Dears to be t Brest rate, co Scenario 1 8.1421 8.394 7.898 9.549 9.897 8.286 8.583 8.892 9.214 Period 9 9.309 9.755 10.159 10.583 11.027 11.491 Period 10 10.462 10.950 11.464 12.006 12.578 13.181 14.487 15.937 17.549 Period 11 11.567 12.169 12.808 13.486 14.207 14.972 16.645 18.531 20.655 Period 12 12.683 13.412 14.192 15.026 15.917 16.870 18.977 21.384 24.133 Period 13 13.809 14.680 15.618 16.627 17.713 18.882 21.495 24.523 28.029 Period 14 14.947 15.974 17.086 18.292 19.599 21.015 24.215 27.975 32 393 Period 15 16.097 17.293 18.509 20.024 21.579 23.276 27.152 31.772 37.200 Period 20 22.019 24.297 26.870 29.778 33.066 36.786 45.762 57.275 72.052 91.025) Period 25 28.243 32.030 36.459 41.646 47.727 54.865 73.106 98.347 133.334 181.871 Period 30 34.785 40.568 47.575 56.085 06.439 79.058 113.283 164.494 241.333 356.787 Period 40 48.886 60 402 75.401 95.026 120 800 154.762 250 057 442 593 767.091 1.342 025 8.923 9.487 10.089 10.730 11.414 12.142 12.916 10.637 11.436 12.300 13.233 14.240 15.327 16.499 12.488 13.579 14.776 16.065 17.519 19.086 20.799 19.337 21.321 23.521 25.959 23.045 25.733 28.755 32.150 27.271 30.850 34.931 39.581 32.059 36.786 42.219 48.497 37.581 43.672 50.818 59.196 43.842 51.660 60.965 72.035 115.380 146.628 186.688 249.214 342.603 471.981 530.312 790 948 1,181.882 2.360 757 4,163 213 7.343.858 Print Done interest rate? Clear 60 (lump sum) now 60 (lump sum) eight years from now e present value of each a the icon to view the prese Present Value of $1 The icon to view the future % interest rate, calculate lue of Scenario 1 $ lue of Scenario 2 $ lue of Scenario 3 nario yields the highest pr 3 appears to be the best % interest rate, calculate : alue of Scenario 1 Present Value of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 Period 2 0.980 0.961 0.943 0.925 0.907 0.890 0.857 0.826 0.797 0.769 0.743 0.718 0.694 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.482 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.681 0.621 0.567 0.519 0.476 0.437 0.402 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.335 Period 7 0.933 0.871 0.813 0.760 0.711 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.279 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.540 0.467 0.404 0.351 0.305 0.266 0.233 Period 9 0.914 0.837 0.766 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.263 0.225 0.194 Period 10 0.905 0.820 0.744 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.227 0.191 0.162 Period 11 0.896 0.804 0.722 0.650 0.585 0.527 0.429 0.350 0.287 0.237 0.195 0.162 0.135 Period 12 0.887 0.788 0.701 0.625 0.557 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 Period 13 0.879 0.773 0.681 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 Period 14 0.870 0.758 0.661 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.078 Period 15 0.861 0.743 0.642 0.555 0.481 0.417 0.315 0.239 0.183 0.140 0.108 0.084 0.065 Period 20 0.820 0.673 0.554 0.456 0.377 0.312 0.215 0.149 0.104 0.073 0.051 0.037 0.026 Period 25 0.780 0.610 0.478 0.375 0.295 0.233 0.146 0.092 0.059 0.038 0.024 0.016 0.010 Period 30 0.742 0.552 0.412 0.308 0.231 0.174 0.099 0.057 0.033 0.020 0.012 0.007 0.004 Period 40 0.672 0.453 0.307 0.208 0.142 0.097 0.046 0.022 0.011 0.005 0.003 0.001 0.001 Print Done ad a 10% interest rate? mp sum) now imp sum) eight years from now sent value of e on to view the p on to view the f Future Value of $1 Future Value of $1 Periods 1% 2% 3% 4% 5% Period 1 1.010 1.020 1.030 1.040 1.050 terest rate, calcu Period 2 1.020 1.040 1.061 1.082 Period 3 1.030 1.061 1.093 1.125 of Scenario 1 Period 4 1.041 1,082 1.126 1.170 1.216 Period 5 1.051 1.104 1.159 1.217 1.276 6% 8% 10% 12% 14% 16% 1.060 1.080 1.100 1.120 1.140 1.160 1.103 1.124 1.166 1.210 1.254 1.300 1.346 1.158 1.191 1.260 1.331 1.405 1.482 1.262 1.360 1.464 1.574 1.689 1.338 1.469 1.611 1.762 1.925 18% 20% 1.180 1.200 1.392 1.440 1.561 1.643 1.728 1.811 1.939 2.074 2.100 2.288 2.488 of Scenario 2 Period 6 1.062 1.126 1.194 1.265 of Scenario 3 Period 7 1.072 1.149 1.230 1.316 1.340 1.407 Period 8 1.083 1.172 1.267 1.369 1.477 yields the highe Period 9 1.094 1.195 1.305 1.423 1.551 1.689 Period 10 1.105 1.219 1.344 1.480 1.629 1.791 2.159 2.594 1.419 1.587 1.772 1.974 2.195 1.504 1.714 1.949 2.211 1.594 1.8511 2.144 2.476 1.999 2.358 2.773 3.106 2.436 2.700 2.986 2.502 2.8261 3.185 3.583 2.853 3.278 3.759 4.300 3.252 3.803 4.435 5.160 3.707 4.411. 5.234 6.192 ppears to be the Period 11 1.116 Period 12 1.127 nterest rate, calcu Period 13 1.138 Period 14 1,149 of Scenario 1 Period 15 1.161 Period 20 1.220 Period 25 1.282 Period 30 Period 40 1.348 1.489 1.243 1.384 1.539 1.710 1.898 2.332 2.853 3.479 1.268 1.426 1.601 1.795 2012 2.518 3.138 3.896 1.294 1.469 1.665 1.886 2.133 2.720 3.452 4.363 5.492 1.319 1.513 1.732 1.980 2.261 2.937 3.797 4.887 6.261 1.346 1.558 1.801 2.079 2.397 3.172 4.177 5.474 7.138 9.266 11.974 1.486 1.806 2.191 2.653 3.207 4.661 6.727 9.646 13.743 19.461 27.393 38.338 1.641 2.094 2.666 3.386 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 1.811 2.427 3.243 4,322 5.743 10.063 17.449 29.960 50.950 85.850 143.371 237.376) 2.208 3.262 4.801 7.040 10.286 21.725 45.259 93.051 188 854 378.721 750.378 1.469.772 4.226 5.117 6.176 7.430 4.818 5.936 7.288 8.916 6.886 8.599 10.699 7.988 10.147 12.839 15.407 Print Done 10% interest rate?