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 six years 2. $50,100 (lump sum) now 3. $98,150 (lump sum) six years from now 5 (Click the icon to View Present Value of $1 table.) (Click the icon to View Present Value of Ordinary Annuity of $1 table.) Read the muirements. Requirement 1. Calculate the present value of each scenario using a 6% 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.) Present Value Scenario 1: Scenario 2: Scenario 3: V appears to be the best option. Based on a 6% interest rate, its present value is the V . 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.) Present Value Scenario 1: Scenario 2: Scenario 3: V appears to be the best option. Based on a 12% interest rate, its present value is the V . i Reference - X Present Value of Ordinary Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% A W N - 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.893 0.877 0.870 0.862 0.847 0.833 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 1.690 1.647 1.626 1.605 1.566 1.528 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.402 2.322 2.283 2.246 2.174 2. 106 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3. 170 3.037 2.914 2.855 2.798 2.690 2.589 5 4.853 4.713 4.580 |4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.605 3.433 3.352 3.274 4 3.127 2.991 5.795 5.601 5.417 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 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.564 4.288 4. 160 4.039 9 3.812 3.605 CO 00 7.652 7.325 7.020 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 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.328 4.946 4.772 4.607 4.303 4.031 10 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.650 5.216 5.019 4.833 4.494 4. 192 11 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 5.938 5.453 5.234 5.029 4.656 4.327 12 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 4.793 4.439 13 12. 134 11.348 10.635 9.986 9.394 8.853 8.358 7.904 7.487 77.103 6.424 5.842 5.583 5.342 4.910 4.533 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 5.724 5.468 5.008 4.611 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 5.847 5.575 5.092 4.675 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 5.954 5.669 5.162 4.730 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 9 5.222 4.775 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 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 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 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 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 Print Done