Print 6. Listed below are three lottery payout options. (Click the icon to view the lottery payout options.) Rather than compare the payout options at their present values, compare the payout options at their future value ten years from now. a. Using a 6% interest rate, what is the future value of each payout option? b. Rank your preference of payout options. c. Does computing the future value rather than the present value of the options change your preference of payout options? Explain. 2(Click the icon to view the future value factor table.) 3(Click the icon to view the future value annuity factor table.) 4(Click the icon to view the present value factor table.) 5(Click the icon to view the present value annuity factor table.) 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. -, as long as we convert each payment option to its value (5) - using the same interest rate. The preference among the options (6) - we compare We can make a valid comparison between the payout options (4) 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 (7) cash flows to (8) point in time using (9) - interest rate. Print 1: Data Table Option 1: Option 2: Option 3: $995,000 now $150,000 at the end of each year for the next ten years $1,750,000 ten years from now 2: Reference Future Value of $1 Periods 3% 4% 5% 14% 18% 20% 1% 1.010 1.020 1.030 1.041 1.051 2% 1.020 1.040 1.061 1.082 1.104 1.030 1.061 1.093 1.126 1.159 1.040 1.082 1.125 1.050 1.103 1.158 1.216 1.276 6% 1.060 1.124 1.191 1.262 1.338 8% 1.080 1.166 1.260 1.360 1.469 10% 1.100 1.210 1.331 1.464 12% 1.120 1.254 1.405 1.140 1.300 1.482 1.689 1.925 16% 1.160 1.346 1.561 1.811 2.100 1.180 1.392 1.643 1.939 2.288 1.200 1.440 1.728 2.074 2.488 1.170 1.574 1.217 1.611 1.762 2.436 1.772 1.949 1.062 1.072 1.083 1.094 1.105 1.126 1.149 1.172 1.195 1.219 1.194 1.230 1.267 1.305 1.344 1.265 1.316 1.369 1.423 1.480 1.340 1.407 1.477 1.551 1.629 1.419 1.504 1.594 1.689 1.791 1.974 2.211 2.476 2.773 3.106 2.144 2.195 2.502 2.853 3.252 3.707 2.700 3.185 3.759 2.986 3.583 4.300 5.160 6.192 2.826 3.278 3.803 4.411 2.358 4.435 2.594 5.234 1.587 1.714 1.851 1.999 2.159 2.332 2.518 2.720 2.937 3.172 1.898 2.012 3.479 3.896 1.116 1.127 1.138 1.149 1.161 1.243 1.268 1.294 1.319 1.346 1.384 1.426 1.469 1.513 1.558 1.539 1.601 1.665 1.732 1.801 1.710 1.796 1.886 1.980 2.133 2.853 3.138 3.452 3.797 4.177 4.363 4.226 4.818 5.492 6.261 7.138 5.117 5.936 6.886 7.988 9.266 6.176 7.288 8.599 10.147 11.974 7.430 8.916 10.699 12.839 15.407 2.261 2.397 4.887 5.474 2.191 2.666 1.220 1.282 1.348 1.489 1.486 1.641 1.811 2.208 1.806 2.094 2.427 3.262 2.653 3.386 4.322 7.040 3.207 4.292 5.743 10.286 4.661 6.848 10.063 21.725 6.727 10.835 17.449 45.259 9.646 17.000 29.960 9 3.051 13.743 26.462 50.950 188.884 19.461 40.874 85.850 378.721 27.393 62.669 143.371 750.378 38.338 95.396 237.376 1,469.772 4.801 TIL 3: Reference Future Value of Annuity of $1 Periods 3% 4% 18% 1% 1.000 2.010 2% 1.000 2.020 3.060 4.122 5.204 5% 1.000 2.050 3.153 4.310 5.526 1.000 2.030 3.091 4.184 5.309 6% 1.000 2.060 3.184 4.375 5.637 8% 1.000 2.080 3.246 4.506 5.867 10% 1.000 2.100 3.310 4.641 6.105 14% 1.000 2.140 3.440 4.921 6.610 16% 1.000 2.160 3.506 5.066 6.877 3.030 12% 1.000 2.120 3.374 4.779 6.353 8.115 10.089 12.300 14.776 17.549 20% 1.000 2.200 3.640 5.368 7.442 1.000 2.180 3.572 5.215 7.154 4.060 5.101 1.000 2.040 3.122 4.246 5.416 6.633 7.898 9.214 10.583 12.006 6.152 7.214 8.286 9.369 10.462 6.308 7.434 8.583 9.755 10.950 6.468 7.662 8.892 10.159 11.464 6.802 8.142 9.549 11.027 12.578 6.975 8.394 9.897 11.491 13.181 7.336 8.923 10.637 12.488 14.487 7.716 9.487 11.436 13.579 15.937 8.536 10.730 13.233 16.085 19.337 8.977 11.414 14.240 17.519 21.321 9.442 12.142 15.327 19.086 23.521 9.930 12.916 16.499 20.799 25.959 11.567 12.683 13.809 14.947 16.097 12.169 13.412 14.680 15.974 17.293 12.808 14.192 15.618 17.086 18.599 13.486 15.026 16.627 18.292 20.024 14.207 15.917 17.713 19.599 21.579 14.972 16.870 18.882 21.015 23.276 16.645 18.977 21.495 24.215 27.152 18.531 21.384 24.523 27.975 31.772 20.655 24.133 28.029 32.393 37.280 23.045 27.271 32.089 37.581 43.842 25.733 30.850 36.786 43.672 51.660 28.755 34.931 42.219 50.818 60.965 32.150 39.581 48.497 59.196 72.035 186.688 471.981 1,181.882 7,343.858 22.019 28.243 34.785 48.886 24.297 32.030 40.568 6 0.402 26.870 36.459 47.575 75.401 29.778 41.646 56.085 95.026 33.066 47.727 66.439 120.800 36.786 54.865 79.058 154.762 45.762 73.106 113.283 259.057 57.275 98.347 164.494 442.593 72.052 133.334 241.333 767.091 91.025 115.380 181.871 249.214 356.787 530.312 1,342.0252,360.757 146.628 342.603 790.948 4,163.213 4. RCICICIILE Present Value of $1 Periods 1% 0.990 0.980 0.971 0.961 0.951 0.942 0.933 0.923 2% 0.980 0.961 0.942 0.924 0.906 3% 0.971 0.943 0.915 0.888 0.863 5% 0.952 0.907 0.864 0.823 0.784 6% 0.943 0.890 0.840 0.792 0.747 8% 0.926 0.857 0.794 0.735 0.681 10% 12% 0.9090.893 0.826 0.797 0.751 0.712 0.683 0.636 0.621 0.567 14% 0.877 0.769 0.675 0.592 0.519 16% 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 18% 0.847 0.718 0.609 0.516 0.437 0.370 0.314 0.266 0.225 0.191 20% 0.833 0.694 0.579 0.482 0.402 0.837 0.813 0.746 0.711 0.677 0.645 0.614 0.614 0.564 0.513 0.467 0.424 0.507 0.452 0.404 0.361 0.630 0.583 0.540 0.500 0.463 0.429 0.335 0.279 0.233 0.456 0.400 0.351 0.308 0.270 0.914 0.263 4% 0.962 0.925 0.889 0.855 0.822 0.790 0.760 0.731 0.703 0.676 0.650 0.625 0.601 0.577 0.555 0.456 0.375 0.308 0.208 0.194 0.227 0.162 0.350 0.287 0.195 0.905 0.896 0.887 0.879 0.870 0.861 0.135 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.673 0.610 0.552 0.453 0.557 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.55 0.478 0.412 0.307 0.705 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 0.312 0.233 0.174 0.097 0.397 0.237 0.208 0.182 0.160 0.140 0.530 0.505 0.481 0.377 0.295 0.231 0.142 0.368 0.290 0.340 0.263 0.315 0.239 0.215 0.149 0.146 0.092 0.099 0.057 0.046 0.022 0.820 0.162 0.168 0.137 0.145 0.116 0.125 0.099 0.108 0.084 0.051 0.037 0.024 0.016 0.0120.007 0.003 0.001 0.229 0.205 0.183 0.104 0.059 0.033 0.011 0.112 0.093 0.078 0.065 0.026 0.010 0.004 0.001 0.780 0.742 0.672 0.073 0.038 0.020 0.005 5: Reference Present Value of Annuity of $1 Periods 1% 0.990 1.970 2.941 3.902 4.853 2% 0.980 1.942 2.884 3.808 4.713 3% 0.971 1.913 2.829 3.717 4.580 4% 0.962 1.886 2.775 3.630 4.452 3.812 5.601 6.472 7.325 8.162 8.983 5.417 6.230 7.020 7.786 8.530 5.795 6.728 7.652 8.566 9.471 10.368 11.255 12.134 13.004 5.242 6.002 6.733 7.435 8.111 5.335 4.344 4 946 5% 6% 8% 10% 12% 14% 16% 18% 20% 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 1.859 1.833 1.783 1.736 1.690 1.647 1.605 1.566 1.528 2.723 2.673 2.577 2.487 2.402 2.322 2.246 2.174 2.106 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 5.076 4.917 4.623 4.355 4.111 3.889 3.685 3.498 3.326 5.786 5.206 4.868 4.564 4.288 4.039 6.463 6.210 5.747 4.968 4.639 4.078 7.108 6.802 6.247 5.759 5.328 4.607 4.303 7.722 7.360 6.710 6.145 5.650 4.833 4.494 8.306 7.887 6.495 5.938 5.453 5.029 4.656 4.327 8.863 8.384 7.536 6.814 6.194 5.660 5.197 4.793 4.439 9.394 8.853 7.904 7.103 6.424 5.842 5.342 4.910 9.899 9.295 8.244 7.367 6.628 6.002 5.468 5.008 4.611 10.380 9.712 8.559 7.606 6.811 6.142 5.575 5.092 4.675 12.462 11.470 9.818 8.514 7.469 6.623 5.929 5.353 14.094 12.783 10.675 9.077 7.843 6.873 6.097 5.467 4.948 15.372 13.765 11.258 9.427 8.055 7.003 6.177 5.517 4.979 17.159 15.046 11.925 | 9.779 | 8.244 | 7.105 | 6.233 | 5.548 | 4.997 7.139 9.787 9.253 8.760 10.575 9.954 9.385 11.348 10.635 9.986 12.106 11.296 10.563 12.849 11.938 11.118 16.351 14.877 13.590 19.523 17.413 15.622 22.396 | 19.600 17.292 27.355 23.115 / 19.793 4.870 18.046 22.023 25.808 32.835 40 (4) O (7) O (8) (1) O O O Option 1 Option 2 Option 3 (2) O O O Option 1 Option 2 Option 3 (3) O O O 000 Option 1 Option 2 Option 3 at any point in time only at the future point in time only at the present point in time (5) O at the future point in time O at the present point in time O at the same point in time (6) O differs if O is the same regardless of whether all most of the different O the same O (9) O different O the same