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 eight years 2. $48,350 (lump sum) now 3. $99,850 (lump sum) eight years from now 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, XXXX. Round the present value to the nearest whole dollar.). Scenario 1,8% discount rate, Present value = Scenario 2,8% discount rate, Present value = Scenario 3,8% discount rate, Present value = appears to be the best option. Based on an 8% interest rate, its present value is the 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, XXXX. Round the present value to the nearest whole dollar.) Scenario 1,12% discount rate, Present value = Scenario 2,12% discount rate, Present value = Scenario 3,12% discount rate, Present value = appears to be the best option. Based on a 12% interest rate, its present value is the \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{17}{|c|}{ Present Value of $1} \\ \hline Perlods & 1% & 2% & 3% & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 12% & 14% & 15% & 16% & 18% & 20% \\ \hline Period 1 & 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 \\ \hline Period 2 & 0.980 & 0.961 & 0.943 & 0.925 & 2907 & 0.890 & & 857 & 842 & 826 & 0.797 & 0.769 & 0.756 & .743 & 0.718 & 0.694 \\ \hline Period 3 & 0.971 & 0.942 & 0.915 & 0.889 & 0.864 & 0.840 & & & 772 & & 0.712 & 0.675 & 0.658 & 0.641 & 0.609 & 0.579 \\ \hline Period 4 & 0.961 & 0.924 & 0.888 & 0.855 & 0.823 & 0.792 & & & 706 & 683 & 636 & .592 & 0.572 & 552 & 516 & 482 \\ \hline Period 5 & 0.951 & 0.906 & 0.863 & 0.822 & 0.784 & 0.747 & 3 & & 650 & 621 & 0.567 & 0.519 & 0.497 & 1.476 & 1437 & 402 \\ \hline eriod 6 & 942 & 888 & 837 & 90 & 140 & ros & 0.666 & 3 & 90 & 84 & 0/ & 456 & 1.432 & 10 & 1370 & 0.335 \\ \hline Peri & 13 & 0.871 & 0.813 & 50 & 0 & 665 & & & & & 52 & 00 & 376 & 354 & 314 & 279 \\ \hlinePe & 23 & 853 & 789 & 1 & 0 & 627 & & & & & & & 327 & & 266 & 233 \\ \hline & 914 & 837 & 0.766 & 0.703 & 0.645 & 0.592 & 0.54 & 0 & 460 & 4 & 0.361 & 0.308 & 0.284 & 263 & 0.225 & 0.194 \\ \hline & 005 & .820 & 0.744 & 0.676 & 0.614 & 558 & & & 422 & s & 0.322 & 0.270 & 0.247 & 227 & 0.191 & 0.162 \\ \hline & & +1 & & & & & & & & & & 1 & 15 & & 62 & \\ \hline Peri & 887 & 788 & 201 & 0.625 & 0.557 & 497 & & & & 9 & 0.257 & 88 & 0.187 & ig & 137 & 0.112 \\ \hline Period 13 & 0.879 & 773 & .681 & 0.601 & 0.530 & & & & & & & & & & & 993 \\ \hline Period 14 & 0.870 & 0.758 & 0.661 & 0.577 & 0.505 & 0.442 & 0 & 10 & 99 & 33 & 0.205 & 0.160 & 0.141 & 5 & 0.099 & 0.078 \\ \hline & - & & & & & & & & & & 33 & 0.140 & 0.123 & 8 & 0.084 & 0.065 \\ \hline & 853 & 0.728 & 623 & 0. & & & & & & & & 0.123 & 0.107 & 0.093 & 0.071 & 0034 \\ \hline & & 0.714 & & & & 1 & & & & & 0.146 & 0.108 & 0.093 & 0.080 & 0.060 & 0.045 \\ \hline Period 18 & 0.836 & 0.700 & 0.587 & 0.494 & 0.416 & 0.350 & 0.2 & 02 & & 0 & 0.130 & 0.095 & 0.081 & 0.069 & 0.051 & 0.038 \\ \hline Period 19 & 0.828 & 0.686 & 0.570 & 0.475 & 0.396 & 0.331 & 0.2 & 0.2 & 0.194 & & & 0.083 & 0.070 & 30 & 0.043 & 0.031 \\ \hline 20 & & 0.673 & 0.554 & 0.456 & 0.377 & 0.312 & 0.258 & 02 & 8 & & & 0. & 0.061 & 0.051 & 0.037 & 0.026 \\ \hline & 0.811 & 0.660 & 0.538 & 0.439 & 0.359 & 0.294 & & & & & 93 & 0.064 & 0.053 & & & OUR2 \\ \hline Period 22 & 0.803 & 0.647 & 0.522 & 0.422 & 0.342 & 0.278 & 0.226 & 0.184 & 0 & 0.123 & 0.083 & 0.056 & 0.046 & 0.038 & 0.026 & 0.018 \\ \hline Period 23 & 0.795 & 0.634 & 0.507 & 0.406 & 0.326 & 0.262 & & 0.170 & 0.138 & & & 0.049 & 0.040 & 0.033 & 0.022 & 0.015 \\ \hline Period 24 & 0.788 & 0.622 & 0.492 & 0.390 & 0.310 & 0.247 & 0.197 & 0.158 & 0.126 & 0.102 & 0.066 & 0.043 & 0.035 & 0.028 & 0.019 & 0.013 \\ \hline bonelad ok & reve & & nave & - & A 36 . & & & & & A nom & anco & & ano & 0.020 & vore & \\ \hline \end{tabular} Present Value of Ordinary Annuity of $1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline Periods & 1% & 2% & % & % & % & 6% & % & % & 9% & % & 12% & 4% & 15% & 16% & & 200 \\ \hline riod 1 & 990 & 880 & & & 2 & 0 & & & & & 893 & 77 & 870 & 0.862 & 87 & 0.833 \\ \hline & & & & & & & & & & & & & & & & 1.528 \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & 33 & 890 & & & & & 3.2 & .127 & 1.99 \\ \hline d 6 & 95 & 601 & 447 & 5.242 & 076 & 917 & 4.767 & 623 & 486 & 55 & & & & .685 & 98 & 32 \\ \hline & & & & & & & & & & & & & & & & 60 \\ \hline & & 7 & & & & & & & & & & & & & & 3.831 \\ \hline & & & & & & & & 6 & & & & & & I & & 4.031 \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & 8.760 & 21 & & & & & & & & & & & 32 \\ \hline & & 5 & & 9 & 33 & & & 7 & & 6 & & & & & 3 & 43 \\ \hline & & & & & 4 & 3 & & 7 & & 7 & & & & & 0 & 1.53 \\ \hline & & & & & & & & & & & & & & & 18 & 61 \\ \hline & & & & & & & & & & & & & & & & W. \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & 77 \\ \hline & & & & & & & & & & & & & & & & 81 \\ \hline & & & & & & & & & & & & & & & & 6.84 \\ \hline & & & & 3.590 & 4 & & & 818 & 12 & 8.5 & 7.469 & 6.6 & 6.2 & 5.92 & 5.3 & 187 \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & \\ \hline \end{tabular} 1. Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value? Round to the nearest whole dollar. 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 oresent value to the nearest whole dollar ) 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 eight years 2. $48,350 (lump sum) now 3. $99,850 (lump sum) eight years from now 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, XXXX. Round the present value to the nearest whole dollar.). Scenario 1,8% discount rate, Present value = Scenario 2,8% discount rate, Present value = Scenario 3,8% discount rate, Present value = appears to be the best option. Based on an 8% interest rate, its present value is the 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, XXXX. Round the present value to the nearest whole dollar.) Scenario 1,12% discount rate, Present value = Scenario 2,12% discount rate, Present value = Scenario 3,12% discount rate, Present value = appears to be the best option. Based on a 12% interest rate, its present value is the \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{17}{|c|}{ Present Value of $1} \\ \hline Perlods & 1% & 2% & 3% & 4% & 5% & 6% & 7% & 8% & 9% & 10% & 12% & 14% & 15% & 16% & 18% & 20% \\ \hline Period 1 & 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 \\ \hline Period 2 & 0.980 & 0.961 & 0.943 & 0.925 & 2907 & 0.890 & & 857 & 842 & 826 & 0.797 & 0.769 & 0.756 & .743 & 0.718 & 0.694 \\ \hline Period 3 & 0.971 & 0.942 & 0.915 & 0.889 & 0.864 & 0.840 & & & 772 & & 0.712 & 0.675 & 0.658 & 0.641 & 0.609 & 0.579 \\ \hline Period 4 & 0.961 & 0.924 & 0.888 & 0.855 & 0.823 & 0.792 & & & 706 & 683 & 636 & .592 & 0.572 & 552 & 516 & 482 \\ \hline Period 5 & 0.951 & 0.906 & 0.863 & 0.822 & 0.784 & 0.747 & 3 & & 650 & 621 & 0.567 & 0.519 & 0.497 & 1.476 & 1437 & 402 \\ \hline eriod 6 & 942 & 888 & 837 & 90 & 140 & ros & 0.666 & 3 & 90 & 84 & 0/ & 456 & 1.432 & 10 & 1370 & 0.335 \\ \hline Peri & 13 & 0.871 & 0.813 & 50 & 0 & 665 & & & & & 52 & 00 & 376 & 354 & 314 & 279 \\ \hlinePe & 23 & 853 & 789 & 1 & 0 & 627 & & & & & & & 327 & & 266 & 233 \\ \hline & 914 & 837 & 0.766 & 0.703 & 0.645 & 0.592 & 0.54 & 0 & 460 & 4 & 0.361 & 0.308 & 0.284 & 263 & 0.225 & 0.194 \\ \hline & 005 & .820 & 0.744 & 0.676 & 0.614 & 558 & & & 422 & s & 0.322 & 0.270 & 0.247 & 227 & 0.191 & 0.162 \\ \hline & & +1 & & & & & & & & & & 1 & 15 & & 62 & \\ \hline Peri & 887 & 788 & 201 & 0.625 & 0.557 & 497 & & & & 9 & 0.257 & 88 & 0.187 & ig & 137 & 0.112 \\ \hline Period 13 & 0.879 & 773 & .681 & 0.601 & 0.530 & & & & & & & & & & & 993 \\ \hline Period 14 & 0.870 & 0.758 & 0.661 & 0.577 & 0.505 & 0.442 & 0 & 10 & 99 & 33 & 0.205 & 0.160 & 0.141 & 5 & 0.099 & 0.078 \\ \hline & - & & & & & & & & & & 33 & 0.140 & 0.123 & 8 & 0.084 & 0.065 \\ \hline & 853 & 0.728 & 623 & 0. & & & & & & & & 0.123 & 0.107 & 0.093 & 0.071 & 0034 \\ \hline & & 0.714 & & & & 1 & & & & & 0.146 & 0.108 & 0.093 & 0.080 & 0.060 & 0.045 \\ \hline Period 18 & 0.836 & 0.700 & 0.587 & 0.494 & 0.416 & 0.350 & 0.2 & 02 & & 0 & 0.130 & 0.095 & 0.081 & 0.069 & 0.051 & 0.038 \\ \hline Period 19 & 0.828 & 0.686 & 0.570 & 0.475 & 0.396 & 0.331 & 0.2 & 0.2 & 0.194 & & & 0.083 & 0.070 & 30 & 0.043 & 0.031 \\ \hline 20 & & 0.673 & 0.554 & 0.456 & 0.377 & 0.312 & 0.258 & 02 & 8 & & & 0. & 0.061 & 0.051 & 0.037 & 0.026 \\ \hline & 0.811 & 0.660 & 0.538 & 0.439 & 0.359 & 0.294 & & & & & 93 & 0.064 & 0.053 & & & OUR2 \\ \hline Period 22 & 0.803 & 0.647 & 0.522 & 0.422 & 0.342 & 0.278 & 0.226 & 0.184 & 0 & 0.123 & 0.083 & 0.056 & 0.046 & 0.038 & 0.026 & 0.018 \\ \hline Period 23 & 0.795 & 0.634 & 0.507 & 0.406 & 0.326 & 0.262 & & 0.170 & 0.138 & & & 0.049 & 0.040 & 0.033 & 0.022 & 0.015 \\ \hline Period 24 & 0.788 & 0.622 & 0.492 & 0.390 & 0.310 & 0.247 & 0.197 & 0.158 & 0.126 & 0.102 & 0.066 & 0.043 & 0.035 & 0.028 & 0.019 & 0.013 \\ \hline bonelad ok & reve & & nave & - & A 36 . & & & & & A nom & anco & & ano & 0.020 & vore & \\ \hline \end{tabular} Present Value of Ordinary Annuity of $1 \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline Periods & 1% & 2% & % & % & % & 6% & % & % & 9% & % & 12% & 4% & 15% & 16% & & 200 \\ \hline riod 1 & 990 & 880 & & & 2 & 0 & & & & & 893 & 77 & 870 & 0.862 & 87 & 0.833 \\ \hline & & & & & & & & & & & & & & & & 1.528 \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & 33 & 890 & & & & & 3.2 & .127 & 1.99 \\ \hline d 6 & 95 & 601 & 447 & 5.242 & 076 & 917 & 4.767 & 623 & 486 & 55 & & & & .685 & 98 & 32 \\ \hline & & & & & & & & & & & & & & & & 60 \\ \hline & & 7 & & & & & & & & & & & & & & 3.831 \\ \hline & & & & & & & & 6 & & & & & & I & & 4.031 \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & 8.760 & 21 & & & & & & & & & & & 32 \\ \hline & & 5 & & 9 & 33 & & & 7 & & 6 & & & & & 3 & 43 \\ \hline & & & & & 4 & 3 & & 7 & & 7 & & & & & 0 & 1.53 \\ \hline & & & & & & & & & & & & & & & 18 & 61 \\ \hline & & & & & & & & & & & & & & & & W. \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & 77 \\ \hline & & & & & & & & & & & & & & & & 81 \\ \hline & & & & & & & & & & & & & & & & 6.84 \\ \hline & & & & 3.590 & 4 & & & 818 & 12 & 8.5 & 7.469 & 6.6 & 6.2 & 5.92 & 5.3 & 187 \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & \\ \hline & & & & & & & & & & & & & & & & \\ \hline \end{tabular} 1. Calculate the present value of each scenario using an 8% discount rate. Which scenario yields the highest present value? Round to the nearest whole dollar. 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 oresent value to the nearest whole dollar )