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After hearing a knock at your front door, you are surprised to see the Prize Patrol from a large, well-known magazine subscription company. It has arrived with the good news that you are the big winner, having won $36 million. You have three options. (a) Receive 51.8 million per year for the next 20 years. (b) Have $12 million today. (c) Have $2 million today and receive $1,500,000 for each of the next 20 years. Your financial adviser tells you that it is reasonable to expect to earn 13 percent on investments Required: 1. Calculate the present value of each option (Euture Value of $1. Present Value of St. Future volue Annuity of $1. Present Volus Annuity of $1.) (Use appropriate factor(s) from the tables provided. Round your final answer to the nearest whole dollar. Enter your answers in dollars, not in millions.) Present Value Option A Option B Optionc Value or $1. PT Annuity of $1.) (Use appropriate factor(s) from the tables provided. answers in dollars, not in millions.) Present Value Option A Option B Option C 2. Determine which option you prefer. O Option B O Option C O Option A Balloons By Sunset (BBS) is considering the purchase of two new hot air balloons so that it can expand its desert sunset tours. Various information about the proposed investment follows: (Future Value of 1. Present Value of 51, Future Value Annuity of S1. Present Value Annuity of S1) (Use appropriate factor(s) from the tables provided.) Initial investment for two hot air balloon) Useful life Salvage value Annoal net income generated DOS' cost of capital $ 522,000 9 years $ 45,000 49,06 90 Assume straight line depreciation method is used Required: Help BBS evaluate this project by calculating each of the following: 1. Accounting rate of return (Round your answer to 2 decimal places.) 2. Payback period. (Round your answer to 2 decimal places.) 3. Net present value ( NPV) (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.) 4. Recalculate the NPV assuming BBS's cost of capital is 12 percent. (Do not round Intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.) Required: Help BBS evaluate this project by calculating each of the following: 1. Accounting rate of return. (Round your answer to 2 decimal places.) 2. Payback period. (Round your answer to 2 decimal places.) 3. Net present value (NPV). (Do not round Intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.) 4. Recalculate the NPV assuming Bes's cost of capital is 12 percent. (Do not round intermediate calculations. Negative amount should be indicated by a minus sign. Round the final answer to nearest whole dollar.) % 1 Accounting rate of return 2 Payback period 3. Net present value 4. Net present value assuming 12% cost of capital years