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. $8,000 per year at the end of each of the next five years 2. $50,250 (lump sum) now 3. $100,250 (lump sum) five years from now (Click the icon to view the Present Value of $1 table.) (Click the icon to view the Future Value of $1 table.) Requirements 1. 2. (Click the icon to view the Present Value of Annuity of $1 table.) (Click the icon to view the Future Value of Annuity of $1 table.) 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 12% discount rate? Scenario 2: Scenario 3: appears to be the best option. Based on an 8% discount rate, its present value is the Requirement 2. Would your preference change if you used a 12% discount rate? Begin by calculating the present value of each scenario using a 12% discount rate. (Round the amounts to the nearest dollar.) Present Value Scenario 1: Scenario 2: Scenario 3: Using a 12% discount rate change the preference in this problem. 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. $8,000 per year at the end of each of the next five years 2. $50,250 (lump sum) now 3. $100,250 (lump sum) five years from now (Click the icon to view the Present Value of $1 table.) (Click the icon to view the Present Value of Annuity of $1 table.) (Click the icon to view the Future Value of Annuity of $1 table.) (Click the icon to view the Future Value of $1 table.) Requirements 1. 2. 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 12% discount rate? Requirement 1. Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value? Begin by calculating the present value of each scenario using an 8% discount rate. (Round the amounts to the nearest dollar.) Scenario 1: Scenario 2: Scenario 3: Present Value appears to be the best option. Based on an 8% discount rate, its present value is the Requirement 2. Would your preference change if you used a 12% discount rate? Begin by calculating the present value of each scenario using a 12% discount rate. (Round the amounts to the nearest dollar.) Procent Value Present Value of Annuity of $1 Present Value Periods 1% 2% 3% 4% 5% 12345 670 a 0.990 0.980 0.971 0.962 1.970 1.942 1.913 1.886 2.941 2.884 2.829 3.902 4.853 2.775 3.808 3.717 4.713 4.580 0.952 1.859 2.723 3.630 3.546 4.452 4.329 6% 0.943 7% 8% 10% 14% 0.935 0.926 0.909 0.893 0.877 1.833 1.808 1.783 1.759 1.736 1.690 1.647 2.673 3.465 9% 0.917 12% 2.624 2.577 2.531 2.487 2.402 2.322 2.283 3.387 3.312 3.240 3.170 3.037 2.914 2.855 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.274 15% 16% 18% 0.870 0.862 0.847 0.833 1.626 1.605 1.566 1.528 2.246 2.174 2.106 20% 2.798 2.690 2.589 3.127 2.991 5.795 6.728 8 7.652 9 10 8.111 5.601 5.417 5.242 5.076 4.917 4.767 6.472 6.230 6.002 5.786 5.582 5.389 7.325 7.020 6.733 6.463 6.210 5.971 8.566 8.162 7.786 9.471 8.983 8.530 4.623 4.486 4.355 4.111 5.206 5.033 4.868 4.564 5.747 5.535 5.335 4.968 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 7.722 7.360 7.024 6.710 6.418 6.145 5.650 3.889 3.784 3.685 3.498 3.326 4.288 4.160 4.039 3.812 3.605 4.639 4.487 4.344 4.078 3.837 4.946 4.772 4.607 4.303 4.031 5.216 5.019 4.833 4.494 4.192 11 10.368 9.787 9.253 8.760 8.306 7.887 12 11.255 10.575 9.954 9.385 8.863 8.384 7.499 7.943 13 12.134 11.348 10.635 9.986 9.394 8.853 8.358 14 13.004 12.106 11.296 10.563 9.899 9.295 8.745 15 13.865 12.849 11.938 11.118 10.380 9.712 9.108 7.139 6.805 7.536 7.161 7.904 7.487 8.244 7.786 8.559 8.061 7.606 6.811 6.142 5.847 6.495 5.938 5.453 5.234 5.029 6.814 6.194 5.660 5.421 5.197 7.103 6.424 5.842 5.583 5.342 4.910 4.533 7.367 6.628 6.002 5.724 5.468 5.008 4.611 5.575 5.092 4.675 4.656 4.327 4.793 4.439 16 17 14.718 13.578 12.561 11.652 10.838 10.106 15.562 14.292 13.166 12.166 11.274 10.477 9.447 9.763 18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 19 17.226 15.678 14.324 13.134 12.085 11.158 10.336 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 8.851 8.313 7.824 6.974 6.265 5.954 5.668 5.162 4.730 9.122 8.544 8.022 7.120 6.373 6.047 5.749 5.222 4.775 9.372 8.756 8.201 7.250 6.467 6.128 5.818 5.273 4.812 9.604 8.950 8.365 7.366 6.550 6.198 5.877 5.316 4.843 9.818 9.129 8.514 7.469 6.623 6.259 5.929 5.353 4.870 21 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.649 7.562 6.687 6.312 5.973 5.384 4.891 Print Done 9 10 8.566 8.162 7.786 9.471 8.983 8.530 7.435 7.108 8.111 7.722 6.802 6.515 6.247 5.995 5.759 5.328 4.946 7.360 7.024 6.710 6.418 6.145 5.650 5.216 4.772 4.607 4.303 4.031 5.019 4.833 4.494 4.192 11 12 13 14 15 13.865 12.849 11.938 11.118 10.380 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.495 5.938 5.453 5.234 5.029 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.194 5.660 5.421 5.197 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.424 5.842 5.583 5.342 4.910 4.533 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 5.724 5.468 5.008 4.611 9.712 9.108 8.559 8.061 7.606 6.811 6.142 5.847 5.575 5.092 4.675 6.805 4.656 4.327 4.793 4.439 16 17 18 19 20 14.718 13.578 12.561 11.652 10.838 10.106 15.562 14.292 13.166 12.166 11.274 10.477 16.398 14.992 13.754 12.659 11.690 10.828 17.226 15.678 14.324 13.134 12.085 11.158 18.046 16.351 14.877 13.590 12.462 11.470 9.447 8.851 8.313 7.824 6.974 6.265 5.954 5.668 5.162 4.730 9.763 9.122 8.544 8.022 7.120 6.373 6.047 5.749 5.222 4.775 10.059 9.372 8.756 8.201 7.250 6.467 6.128 5.818 5.273 4.812 10.336 9.604 8.950 8.365 7.366 6.550 6.198 5.877 5.316 4.843 10.594 9.818 9.129 8.514 7.469 6.623 6.259 5.929 5.353 4.870 21 22 23 24 18.857 17.011 15.415 14.029 12.821 11.764 19.660 17.658 15.937 14.451 13.163 12.042 20.456 18.292 16.444 14.857 13.489 12.303 21.243 18.914 16.936 15.247 13.799 12.550 25 22.023 19.523 17.413 15.622 14.094 12.783 10.836 10.017 9.292 8.649 11.061 10.201 9.442 8.772 11.272 10.371 9.580 8.883 11.469 10.529 9.707 8.985 11.654 10.675 9.823 9.077 7.562 6.687 6.312 5.973 5.384 4.891 7.645 6.743 6.359 6.011 5.410 4.909 7.718 6.792 6.399 6.044 5.432 4.925 7.784 6.835 6.434 6.073 5.451 4.937 7.843 6.873 6.464 6.097 5.467 4.948 26 22.795 20.121 17.877 15.983 14.375 13.003 11.826 10.810 27 28 29 30 9.929 23.560 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 24.316 21.281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 25.066 21.844 19.188 16.984 15.141 13.591 12.278 11.158 10.198 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 9.161 7.896 6.906 6.491 6.118 5.480 9.237 7.943 6.935 6.514 6.136 5.492 4.964 9.307 7.984 6.961 6.534 6.152 5.502 4.970 9.370 8.022 6.983 6.551 6.166 5.510 4.975 8.055 7.003 6.566 6.177 5.517 4.979 4.956 40 32.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.244 7.105 6.642 6.233 5.548 4.997 50 39.196 31.424 25.730 21.482 18.256 15.762 13.801 12.233 10.962 9.915 8.304 7.133 6.661 6.246 5.554 4.999 Print Done Future Value of Annuity of $1 Future Value Periods 1% 2% 3% 4% 6% 123 1.000 1.000 1.000 1.000 3.030 2.010 2.020 3.060 3.091 2.030 4 4.060 4.122 4.184 2.040 3.122 4.246 5% 7% 8% 1.000 1.000 1.000 1.000 1.000 2.050 2.060 2.070 2.080 2.090 2.100 9% 10% 12% 14% 15% 1.000 1.000 1.000 1.000 2.120 2.140 2.150 5 5.101 5.204 5.309 5.416 3.153 3.184 3.215 3.246 3.278 3.310 3.374 3.440 4.310 4.375 4.440 4.506 4.573 4.641 4.779 4.921 4.993 5.526 5.637 5.751 5.867 5.985 6.105 6.353 6.610 6.742 3.473 6189 6.152 7 6.308 7.214 7.434 7.662 6.468 6.633 7.898 8.286 8.583 8.892 9.214 6.802 6.975 8.142 8.394 9.549 9.897 7.153 8.654 10.260 9.369 9.755 10.16 10.58 11.03 11.49 11.98 10 10.46 10.95 11.46 12.01 12.58 13.18 13.82 7.336 7.523 8.923 9.200 10.637 11.028 12.49 13.02 14.49 15.19 7.716 8.115 8.536 8.754 9.487 10.089 10.730 11.067 11.436 12.300 13.233 13.727 13.58 14.78 16.09 16.79 15.94 17.55 19.34 20.30 11 12 13 14 15 2345 11.57 12.17 12.81 12.68 13.41 14.19 13.81 14.68 15.62 14.95 15.97 17.09 18.29 16.10 17.29 18.60 20.02 19.60 21.58 13.49 14.21 14.97 15.78 16.65 15.03 15.92 16.87 17.89 18.98 16.63 17.71 18.88 20.14 21.50 21.02 23.28 17.56 18.53 20.65 23.04 24.35 20.14 21.38 24.13 27.27 29.00 22.95 24.52 28.03 32.09 34.35 22.55 24.21 26.02 27.97 32.39 37.58 40.50 25.13 27.15 29.36 31.77 37.28 43.84 47.58 16 17.26 18.64 20.16 25.67 17 18.43 20.01 18 19.61 21.41 19 20.81 22.84 20 22.02 24.30 21.82 23.66 42.75 50.98 21.76 23.70 25.84 28.21 30.84 33.75 36.97 40.54 48.88 59.12 23.41 25.65 28.13 30.91 34.00 37.45 41.30 45.60 55.75 68.39 25.12 27.67 30.54 33.76 37.38 41.45 46.02 51.16 63.44 78.97 26.87 29.78 33.07 36.79 41.00 45.76 51.16 57.27 72.05 91.02 27.89 30.32 33.00 35.95 55.72 65.08 75.84 88.21 102.4 21 23.24 25.78 28.68 31.97 35.72 39.99 44.87 50.42 56.76 64.00 81.70 104.8 118.8 Print Done 0.200 0.303 0.032 3.027 9 9.369 9.755 10.16 10 10.46 10.95 11.46 10.58 11.03 12.01 12.58 20.200 10.037 11.49 11.98 12.49 13.02 13.58 13.18 13.82 14.49 15.19 15.94 11.020 10.200 2.500 14.78 16.09 16.79 17.55 19.34 20.30 12345 11 11.57 12.17 12.81 13.49 12.68 13.41 14.19 15.03 13.81 14.95 14.68 15.97 17.09 15.62 16.10 17.29 18.60 18.29 20.02 14.21 15.92 16.63 17.71 19.60 21.58 14.97 15.78 16.65 17.56 18.53 20.65 16.87 17.89 18.98 20.14 21.38 24.13 27.27 29.00 18.88 20.14 21.50 22.95 24.52 28.03 32.09 34.35 21.02 22.55 24.21 26.02 27.97 32.39 37.58 40.50 23.28 25.13 27.15 29.36 31.77 37.28 43.84 47.58 23.04 24.35 222222222220 16 17.26 18.64 20.16 21.82 23.66 17 18.43 20.01 21.76 23.70 18 19.61 21.41 23.41 25.65 25.84 28.13 19 20.81 22.84 25.12 27.67 22.02 24.30 26.87 29.78 30.54 33.07 25.67 27.89 30.32 28.21 30.84 33.75 30.91 34.00 37.45 41.30 33.76 37.38 41.45 46.02 36.79 41.00 45.76 51.16 57.27 33.00 35.95 42.75 50.98 55.72 36.97 40.54 48.88 59.12 65.08 45.60 55.75 68.39 75.84 51.16 63.44 78.97 88.21 72.05 91.02 102.4 21 23 25.72 23.24 24.47 27.30 28.84 25.78 28.68 31.97 35.72 30.54 34.25 38.51 24 26.97 30.42 25 28.24 32.03 34.43 36.46 32.45 36.62 39.08 41.65 41.43 26 29.53 33.67 38.55 44.31 27 30.82 35.34 40.71 47.08 28 32.13 37.05 42.93 49.97 29 33.45 38.79 45.22 52.97 30 34.78 40.57 47.58 56.08 39.99 44.87 50.42 56.76 64.00 81.70 104.8 118.8 43.39 49.01 55.46 62.87 71.40 92.50 120.4 137.6 47.00 53.44 60.89 69.53 79.54 104.6 138.3 159.3 44.50 50.82 58.18 66.76 76.79 88.50 118.2 158.7 184.2 47.73 54.86 63.25 73.11 84.70 98.35 133.3 181.9 212.8 51.11 59.16 68.68 54.67 63.71 74.48 58.40 68.53 80.70 62.32 73.64 87.35 66.44 79.06 94.46 79.95 93.32 109.2 150.3 208.3 245.7 87.35 102.7 121.1 169.4 238.5 283.6 95.34 113.0 134.2 190.7 272.9 327.1 104.0 124.1 148.6 214.6 312.1 377.2 113.3 136.3 164.5 241.3 356.8 434.7 40 48.89 60.40 75.40 95.03 120.8 154.8 199.6 259.1 337.9 442.6 767.1 1,342 1,779 50 64.46 84.58 112.80 152.67 209.3 290.3 406.5 573.8 815.1 1,164 2,400 4,995 7,218 Print Done