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. $8,550 per year at the end of each of the next eight years 2. $50,100 (lump sum) now 3. $100,250 (lump sum) eight years from now (Click the icon to view Present Value of $1 table.) Read the requirements. (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Requirement 1. Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value? (Round the factors to three decimal places, X.XXX. Round the present value to the nearest whole dollar.) Scenario 1,8% discount rate, Present value = $ 49,134 Scenario 2,8% discount rate, Present value = $ 50,100 Scenario 3, 8% discount rate, Present value = $ 54,162 Scenario 3 appears to be the best option. Based on an 8% interest rate, its present value is the highest Requirement 2. Would your preference change if you used a 12% discount rate? Compute the present value of each scenario using a 12% discount rate. (Round the factors to three decimal places, X.XXX. Round the present value to the nearest whole dollar.) Scenario 1, 12% discount rate, Present value = Reference I Periods 1% 2% Period 1 0.990 0.980 0.971 0.962 3% 4% 5% 6% 7% 8% 0.952 0.943 0.935 Period 2 0.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 0.763 0.735 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 Present Value of $1 9% 10% 12% 14% 15% 16% 18% 20% 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 0.842 0.826 0.797 0.769 0.756 0.743 0.718 0.694 0.772 0.751 0.712 0.675 0.658 0.641 0.609 0.579 0.708 0.683 0.636 0.592 0.572 0.552 0.516 0.482 0.650 0.621 0.567 0.519 0.497 0.476 0.437 0.402 Period 6 Period 7 0.933 0.871 0.813 0.760 0.711 0.942 0.888 0.837 0.790 0.746 0.705 0.666 0.665 0.623 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.582 0.540 Period 9 0.914 0.837 0.766 0.703 0.645 0.592 0.544 0.500 Period 10 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.630 0.596 0.564 0.507 0.456 0.432 0.410 0.370 0.335 0.583 0.547 0.513 0.452 0.400 0.376 0.354 0.314 0.279 0.502 0.467 0.404 0.351 0.327 0.305 0.266 0.233 0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.194 0.463 0.422 0.386 0.322 0.270 0.247 0.227 0.191 0.162 Period 11 0.896 0.804 0.722 0.650 0.585 0.527 0.475 0.429 Period 12 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 Period 13 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 Period 14 0.870 0.758 0.661 0.577 0.505 0.442 0.388 0.340 Period 15 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.388 0.350 0.287 0.356 0.319 0.257 0.326 0.290 0.229 0.299 0.263 0.205 0.275 0.239 0.183 0.237 0.215 0.195 0.162 0.135 0.208 0.187 0.168 0.137 0.112 0.182 0.163 0.145 0.116 0.093 0.160 0.141 0.125 0.099 0.078 0.140 0.123 0.108 0.084 0.065 Period 16 0.853 0.728 0.623 0.534 0.458 0.394 0.339 0.292 Period 17 0.844 0.714 | 0.605 Period 18 0.836 0.700 0.587 0.494 0.416 Period 19 0.828 0.686 0.570 0.475 0.396 Period 20 0.820 0.673 0.554 0.456 0.377 0.513 0.436 0.371 0.317 0.270 0.350 0.296 0.250 0.331 0.277 0.232 0.312 0.258 0.215 0.252 0.218 0.163 0.123 0.107 0.093 0.071 0.054 0.231 0.198 0.146 0.108 0.093 0.080 0.060 0.045 0.212 0.180 0.130 0.095 0.081 0.069 0.051 0.038 0.194 0.164 0.116 0.083 0.070 0.060 0.043 0.031 0.178 0.149 0.104 0.073 0.061 0.051 0.037 0.026 Period 21 0.811 0.660 0.538 0.439 0.359 Period 22 0.803 0.647 0.522 0.422 0.342 0.294 0.242 0.278 0.226 0.199 0.184 0.164 0.135 0.093 0.064 0.053 0.044 0.031 0.022 0.150 0.123 0.083 0.056 0.046 0.038 0.026 0.018 Print Done Reference Present Value of Ordinary Annuity of $1 Periods 1% 2% 3% 4% Period 1 0.990 0.980 0.971 Period 2 1.970 1.942 1.913 Period 3 2.941 2.884 2.829 Period 4 3.902 3.808 Period 5 4.853 4.713 3.717 4.580 Period 6 Period 7 5.795 6.728 6.472 5.601 5.417 6.230 Period 8 7.652 7.325 7.020 Period 9 Period 10 8.566 8.162 7.786 9.471 8.983 8.530 5% 6% 7% 8% 9% 10% 12% 14% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.037 2.914 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.127 2.991 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.111 3.889 3.784 3.685 3.498 3.326 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4.160 4.039 3.812 3.605 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.487 4.344 4.078 3.837 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 15% 16% 18% 20% 0.870 0.862 0.847 0.833 1.626 1.605 1.566 1.528 2.283 2.246 2.174 2.106 2.855 2.798 3.352 3.274 2.690 2.589 4.772 5.019 4.607 4.303 4.031 4.833 4.494 4.192 Period 11 10.368 9.787 9.253 8.760 8.306 7.887 7.499 Period 12 11.255 10.575 9.954 9.385 8.863 8.384 7.943 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 7.103 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.244 7.786 7.367 6.628 6.002 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 6.811 6.142 Period 16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.974 6.265 Period 17 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 7.120 6.373 6.047 5.749 5.222 4.775 Period 18 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 7.250 6.467 6.128 5.818 5.273 4.812 Period 19 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 6.198 5.877 5.316 4.844 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.623 6.259 5.929 5.353 4.870 Period 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 Period 22 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.201 9.442 8.772 7.645 6.743 6.359 6.011 5.410 4.909 7.139 6.805 6.495 7.536 7.161 6.814 5.938 5.453 6.194 5.660 5.234 5.029 4.656 4.327 5.421 5.197 4.793 4.439 6.424 5.842 5.583 5.342 4.910 4.533 5.724 5.468 5.008 4.611 5.847 5.575 5.092 4.675 5.954 5.669 5.162 4.730 Print Done