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 each of the next eight years

2. $48,350 (lump sum) now

3. $100,000 (lump sum) eight years from now

Requirement

Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value? Would your preference change if you used a 10% discount rate?