W 812-6 (similar to) Question Help Your grandfather would like to share some of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose): 1. $7,550 a year at the end of oach of the next eight years 2. S49,960 (lump surn) now $100,050 (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 present value faclor table.) A Present Value of Annuity of S1 (Click the icon to view the future value annuity 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 $ 43,390 Present value of Scenario 2 49,950 Present value of Scenario 3 $ 54,027 Which scenario yields the highest present value? Scenario 3 appears 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 Annuity of $1 Periods 1 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.962 0.943 0.926 0.909 0.893 0.877 0.862 0.862 0.847 0.833 Period 2 1.970 1.942 1.913 1.886 1859 1.833 1.783 1.736 1.6901.647 1.6051.566 1.566 1.528 Period 3 2.941 2884 2.029 2775 2.723 2.673 2.577 2487 2.402 2.322 2.248 2.174 2.108 Period 4 3.902 3.808 3.717 363035483465 2,312 3170 3.037 2.914 2.799 2.690 2.589 Period 5 4.853 4.713 4.580 4.462 4.3294212 3.999 3.791 3.605 3.433 3.274 3.127 2.991 Period 6 5.795 5.601 5.417 5242 5.078 4.917 4.623 4.355 4.111 3.89 3.685 3.498 3.328 Period 7 6.728 6.472 6.230 6.002 5.788 5.582 5.20 4.868 4.564 4.288 4.039 3.812 3.505 Period 8 7.652 7.3257.020 6.733 6.463 6.210 5.747 5.335 4.968 4.639 1.344 4.078 4.078 3.837 Perlod 9 8.566 8.1627.786 7.435 7.108 6.8026.247 5.750 5.328 4.346 | 4.607 4.303 4.031 Period 10 9.471 8.933 8.530 8.111 8.983 0.530 8.1117.722 7.380 6.710 6.145 5.6505.218 4.833 4.494 4.192 Period 11 10.368 9.787 9.250 8.760 8.306 7.887 7.139 6.495 5.930 5.453 5.029 4.656 4.327 Period 12 11.255 10.575 9.954 9.3858.883 384 7.536 6.814 6.1945.660 5.1974.798 4439 Period 13 12.134 11.348 10.836 9.988 9.39488537.904 7.108 6.424 5.842 5.342 4.910 4,533 Period 1413.004 12.108 11.295 10.563 9.899 92958.244 7.367 5.628 5.468 5.00 4.611 Period 15 13.865 12.849 11.938 11.11810.380 9.712 8.559 7.606 6.811 6.142 5.575 5.092 4.675 Period 2018.046 16.351 14.877 13.900 12.462 11.470 9.818 8.514 7.4696.623 5.929 5.362 4.870 Period 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7.843 6.8736.097 6.097 5.467 4.948 Perlod 30 25.808 22.398 19.600 17.292 15.372 13.765 11.258 9.4278.055 7.003 6.177 6.1775.517 4.979 Period 40 32.835 27.355 23.115 19.798 17.159 15.046 11.925 9.779 0.244 7.105 6.233 7.105 6.233 5.548 | 4.997 Present value of Scenario 1 8.032 Enter any number in the edit fields and then click Check Answer. ? Print Dane 3 parts 3 remaining Clear All Future Value of $1 - X Future Value of $1 6% 1.060 1.124 Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 1.010 1.020 1.030 1.041 1.051 2% 1.020 1.040 1.061 1.082 1.104 3% 1.030 1.061 1.093 1.126 1.159 4% 1.040 1.082 1.125 1.170 1.217 5% 1.050 1.103 1.158 1.216 1.276 8% 1.080 1.166 1.260 1.360 1.469 10% 1.100 1.210 1.331 1.464 1.611 12% 1.120 1.254 1.405 1.574 1.762 14% 1.140 1.300 1.482 1.689 1.925 16% 1.160 1.346 1.561 1.811 2.100 18% 1.180 1.392 1.643 1.939 2.288 20% 1.200 1.440 1.728 2.074 2.488 1.191 1.262 1.338 Period 6 Period 7 Period 8 Period 9 Period 10 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 1.587 1.714 1.851 1.999 2.159 1.772 1.949 2.144 2.358 2.594 1.974 2.211 2.476 2.773 3.106 2.195 2.502 2.853 3.252 3.707 2.436 2.826 3.278 3.803 4.411 2.700 3.185 3.759 4.435 5.234 2.986 3.583 4.300 5.160 6.192 Period 11 Period 12 Period 13 Period 14 Period 15 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 2.079 1.898 2.012 2.133 2.261 2.397 2.332 2.518 2.720 2.937 3.172 2.853 3.138 3.452 3.797 4.177 3.479 3.896 4.363 4.887 5.474 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 Period 20 Period 25 Period 30 Period 40 1.220 1.282 1.348 1.489 1.486 1.641 1.811 2.208 1.806 2.094 2.427 3.262 2.191 2.666 3.243 4.801 2.653 3.386 4.322 7.040 3.207 4.661 6.727 9.646 13.743 19.461 27.393 38.338 4.292 6.848 10.835 | 17.000 26.462 40.874 62.669 95.396 5.743 10.063 17.449 29.960 50.950 85.850 143.371 237.376 10.286 21.725 45.259 93.051 188.884 378.721 750.3781,469.772 Print Done Present Value of $1 Present Value of $1 16% Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 0.990 0.980 0.971 0.961 0.951 2% 0.980 0.961 0.942 0.924 0.906 3% 0.971 0.943 0.915 0.888 0.863 4% 0.962 0.925 0.889 0.855 0.822 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% 0.909 0.826 0.751 0.683 0.621 12% 0.893 0.797 0.712 0.636 0.567 14% 0.877 0.769 0.675 0.592 0.519 0.862 0.743 0.641 0.552 0.476 18% 0.847 0.718 0.609 0.516 0.437 20% 0.833 0.694 0.579 0.482 0.402 0.410 0.354 Period 6 0.942 Period 7 0.933 Period 8 0.923 Period 9 0.914 Period 10 0.905 0.888 0.871 0.853 0.837 0.820 0.837 0.813 0.789 0.766 0.744 0.790 0.746 0.760 0.711 0.731 0.677 0.703 0.645 0.676 0.614 0.705 0.665 0.627 0.592 0.558 0.630 0.583 0.540 0.500 0.463 0.564 0.513 0.467 0.424 0.386 0.507 0.452 0.404 0.361 0.322 0.456 0.400 0.351 0.308 0.270 0.305 0.263 0.227 0.370 0.314 0.266 0.225 0.191 0.335 0.279 0.233 0.194 0.162 Period 11 0.896 Period 12 0.887 Period 13 0.879 Period 14 0.870 Period 15 0.861 0.804 0.788 0.773 0.758 0.743 0.722 0.701 0.681 0.661 0.642 0.650 0.625 0.601 0.577 0.555 0.585 0.557 0.530 0.505 0.481 0.527 0.497 0.469 0.442 0.417 0.429 0.397 0.368 0.340 0.315 0.350 0.319 0.290 0.263 0.239 0.287 0.257 0.229 0.205 0.183 0.237 0.208 0.182 0.160 0.140 0.195 0.168 0.145 0.125 0.108 0.162 0.137 0.116 0.099 0.084 0.135 0.112 0.093 0.078 0.065 0.312 Period 20 0.820 Period 25 0.780 Period 30 0.742 Period 40 0.672 0.673 0.610 0.552 0.453 0.554 0.478 0.412 0.307 0.456 0.375 0.308 0.208 0.377 0.295 0.231 0.142 0.233 0.174 0.097 0.215 0.146 0.099 0.046 0.149 0.092 0.057 0.022 0.104 0.059 0.033 0.011 0.073 0.038 0.020 0.005 0.051 0.024 0.012 0.003 0.037 0.016 0.007 0.001 0.026 0.010 0.004 0.001 Print Done Future Value of Annuity of $1 - Future Value of Annuity of $1 10% Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 1.000 2.010 3.030 4.060 5.101 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 4% 1.000 2.040 3.122 4.246 5.416 5% 1.000 2.050 3.153 4.310 5.526 6% 1.000 2.060 3.184 4.375 5.637 8% 1.000 2.080 3.246 4.506 5.867 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.779 6.353 14% 1.000 2.140 3.440 4.921 6.610 16% 1.000 2.160 3.506 5.066 6.877 18% 1.000 2.180 3.572 5.215 7.154 20% 1.000 2.200 3.640 5.368 7.442 Period 6 Period 7 Period 8 Period 9 Period 10 6.152 6.308 6.468 6.633 6.802 6.975 7.214 7.434 7.662 7.898 8.142 8.394 8.286 8.583 8.892 9.214 9.549 9.897 9.369 9.755 10.159 10.583 11.027 11.491 10.462 10.950 11.464 12.006 12.578 13.181 7.336 7.716 8.115 8.923 9.487 10.089 10.637 11.436 12.300 12.488 13.579 14.776 14.487 15.937 17.549 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 Period 11 Period 12 Period 13 Period 14 Period 15 11.567 12.169 12.808 13.486 14.207 14.972 16.645 18.531 20.655 12.683 13.412 14.192 15.026 15.917 16.870 18.977 21.384 24.133 13.809 14.680 | 15.618 | 16.627 | 17.713 18.882 21.495 24.523 | 28.029 14.947 | 15.974 17.086 18.292 19.599 21.015 24.215 27.975 32.393 16.097 | 17.293 18.599 20.024 21.579 23.276 27.152 31.772 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 Period 20 Period 25 Period 30 Period 40 22.019 24.297 26.870 29.778 33.066 36.786 45.762 57.275 | 72.052 91.025 115.380 146.628 186.688 28.243 32.030 36.459 41.646 47.727 54.865 73.106 98.347 133.334 181.871 249.214 342.603 471.981 34.785 40.568 47.575 56.085 | 66.439 79.058 113.283 164.494 241.333 356.787 530.312 790.948 1,181.882 48.88660.402 75.401 95.026 120.800 154.762259.057 442.593 767.091 1,342.025 2,360.757 4,163.213 7,343.858 Print Done