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. $7,250 per year at the end of each of the next eight years 2. $49,650 (lump sum) now 3. $98,650 (lump sum) eight years from now (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 requirements. 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 = 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 10% discount rate? Compute the present value of each scenario using a 10% discount rate. (Round the factors to three decimal places, X.XXX. Round the present value to the nearest whole dollar.) Scenario 1, 10% discount rate, Present value = Scenario 2, 10% discount rate, Present value = Scenario 3, 10% discount rate, Present value = appears to be the best option. Based on a 10% interest rate, its present value is the - Reference Present Value of $1 Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 2% 3% 4% 5% 6% 0.990 0.980 0.971 0.962 0.952 0.943 0.980 0.961 0.943 0.925 0.907 0.890 0.971 0.942 0.915 0.889 0.864 0.840 0.961 0.924 0.888 0.855 0.823 0.792 0.951 0.906 0.863 0.822 0.784 0.747 7% 0.935 0.873 0.816 0.763 0.713 8% 0.926 0.857 0.794 0.735 0.681 9% 10% 12% 14% 15% 16% 18% 20% 0.917 0.909 0.893 0.877 0.870 0.8620.847 0.833 0.8420.826 0.797 0.769 0.756 0.743 0.7180.694 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 0.5190.497 0.476 0.437 0.402 0.630 0.583 0.540 0.500 0.463 0.596 0.564 0.507 0.456 0.432 0.4100.370 0.335 0.547 0.513 0.452 0.400 0.376 0.354 0.314 0.279 0.502 0.467 0.4040.3510.327 0.305 0.266 0.233 0.460 0.424 0.361 0.308 0.284 0.263 0.225 0.194 0.422 0.386 0.322 0.270 0.247 0.227 0.191 0.162 Period 6 0.942 0.888 0.837 0.790 0.746 0.705 0.666 Period 7 0.933 0.871 0.8130.760 0.711 0.665 0.623 Period 8 0.923 0.853 0.789 0.731 0.677 0.627 0.582 Period 9 0.914 0.837 0.766 0.703 0.645 0.592 0.544 Period 10 0.905 0.820 0.744 0.676 0.614 0.558 0.508 Period 11 0.896 0.804 0.722 0.650 0.585 0.527 0.475 Period 12 0.887 0.788 0.701 0.625 0.557 0.497 0.444 Period 13 0.879 0.773 0.681 0.601 0.530 0.469 0.415 Period 14 0.870 0.758 0.661 0.577 0.505 0.442 0.388 Period 15 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.429 0.397 0.368 0.340 0.315 0.388 0.350 0.287 0.237 0.215 0.195 0.162 0.135 0.356 0.319 0.257 0.208 0.187 0.168 0.137 0.112 0.326 0.290 0.229 0.182 0.163 0.145 0.116 0.093 0.299 0.263 0.205 0.160 0.141 0.125 0.099 0.078 0.275 0.239 0.183 0.140 0.123 0.108 0.084 0.065 Print Done - Reference Period 14 0.870 0.7580.661 0.577 0.505 Period 15 0.861 0.743 0.6420.555 0.481 0.442 0.388 0.417 0.362 0.340 0.315 0.299 0.263 0.205 0.1600.141 0.125 0.099 0.078 0.275 0.239 0.183 0.140 0.123 0.1080.084 0.065 Period 16 0.853 0.7280.623 0.534 0.458 0.394 Period 17 0.844 0.714 0.605 0.513 0.436 0.371 Period 18 0.836 0.700 0.587 0.494 0.416 0.350 Period 19 0.828 0.686 0.570 0.475 0.396 0.331 Period 20 10.820 0.673 0.554 0.456 0.377 0.312 0.339 0.317 0.296 0.277 0.258 0.292 0.270 0.250 0.232 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 0.294 Period 22 0.803 0.647 0.522 0.422 0.342 0.278 Period 23 0.795 0.634 0.507 0.406 0.326 0.262 Period 24 0.788 0.622 0.492 0.390 0.310 0.247 Period 25 0.780 0.610 0.478 0.375 0.295 0.233 0.242 0.226 0.211 0.197 0.184 0.199 0.184 0.170 0.158 0.146 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 0.138 0.112 0.074 0.049 0.040 0.033 0.022 0.015 0.126 0.1020.066 0.043 0.035 0.028 0.019 0.013 0.116 0.092 0.059 0.038 0.030 0.024 0.016 0.010 Period 26 0.772 0.598 0.464 0.361 0.281 0.220 Period 27 0.764 0.586 0.450 0.347 0.268 0.207 Period 28 0.757 0.574 0.437 0.333 0.255 0.196 Period 29 0.749 0.563 0.424 0.321 0.243 0.185 Period 30 0.742 0.552 0.412 0.308 0.231 0.174 0.172 0.161 0.150 0.141 0.131 0.135 0.125 0.116 0.107 0.099 0.106 0.084 0.053 0.033 0.026 0.021 0.014 0.009 0.098 0.076 0.047 0.029 0.023 0.018 0.011 0.007 0.090 0.069 0.042 0.026 0.0200.016 0.010 0.006 0.082 0.063 0.037 0.022 0.017 | 0.014 0.008 0.005 0.075 0.057 0.033 0.020 0.015 0.0120.007 0.004 Print Done - Reference Period 16 0.853 0.728 0.623 0.534 0.458 Period 17 0.844 0.714 0.605 0.513 0.436 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 10.820 0.673 0.554 0.456 0.377 0.394 0.371 0.350 0.331 0.312 0.339 0.317 0.296 0.277 0.258 0.292 0.270 0.250 0.232 0.215 0.252 0.218 0.163 0.231 0.198 0.146 0.212 0.180 0.130 0.194 0.164 0.116 0.178 0.149 0.104 0.123 0.107 0.093 0.071 0.054 0.108 0.093 0.080 | 0.060 0.045 0.095 0.081 0.069 0.051 0.038 0.083 0.070 0.060 | 0.043 0.031 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 Period 23 0.795 0.634 0.507 0.406 0.326 Period 24 0.788 0.622 0.492 0.390 0.310 Period 25 0.780 0.610 0.478 0.375 0.295 0.294 0.278 0.262 0.247 0.233 0.242 0.226 0.211 0.197 0.184 0.199 0.184 0.170 0.158 0.146 0.164 0.135 0.093 0.150 0.123 0.083 0.138 0.112 0.074 0.125 0.102 0.066 0.116 0.092 0.059 0.064 0.053 0.044 0.031 0.022 0.056 0.046 0.038 0.026 0.018 0.049 0.040 0.033 0.022 0.015 0.043 0.035 0.028 0.019 0.013 0.038 0.030 0.024 0.0160.010 Period 26 0.772 0.598 0.464 0.361 0.281 Period 27 0.764 0.586 0.450 0.347 0.268 Period 28 0.757 0.574 0.437 0.333 0.255 Period 29 0.749 0.563 0.424 0.321 0.243 Period 30 0.742 0.552 0.412 0.308 0.231 0.220 0.207 0.196 0.185 0.174 0.172 0.161 0.150 0.141 0.131 0.135 0.125 0.116 0.107 0.099 0.106 0.084 0.053 0.098 0.076 0.047 0.090 0.069 0.042 0.0820.063 0.037 0.075 0.057 0.033 0.033 0.026 0.021 0.014 0.009 0.029 0.023 0.018 | 0.011 0.007 0.026 0.0200.0160.0100.006 0.022 0.017 0.014 0.008 0.005 0.0200.015 0.0120.007 0.004 Period 40 0.672 0.453 0.307 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.011 0.005 0.0040.003 0.001 0.001 Period 50 0.608 0.372 0.228 0.141 0.087 0.054 0.034 0.021 0.013 0.009 0.003 0.001 0.001 0.001 Print Done - Reference con Periods Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Period 10 Present Value of Ordinary Annuity of $1 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18% 20% 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 2.4022.322 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 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 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 5.5825.389 5.206 5.033 4.868 4.564 4.288 4.160 4.039 3.812 3.605 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 4.968 4.639 4.4874.344 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 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 5.6505.216 5.019 4.833 4.494 4.192 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 11.255 10.575 9.954 9.385 8.863 8.384 7.943 7.536 7.1616.814 6.194 5.660 5.421 5.197 4.793 4.439 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 4533 13.004 12.106 11.296 10.563 9.899 9.295 8.745 8.2447.786 7.367 6.628 6.002 5.724 5.468 5.008 4.611 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 Period 11 Period 12 Period 13 Period 14 Period 15 Print Done U Reference 5.669 5.1624.730 5.749 5.222 4.775 5.818 5.273 4.812 5.877 5.3164.844 5.929 5.353 4.870 Period 16 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 6.9746.265 5.954 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 Period 18 16.398 14.992 13.754 12.659 11.690 10.828 10.0599.372 8.756 8.201 7.250 6.4676.128 Period 19 17.226 15.678 14.324 13.134 12.08511.158 10.336 9.604 8.950 8.365 7.366 6.5506.198 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 10.5949.818 9.129 8.514 7.469 6.623 6.259 Period 21 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.017 9.292 8.649 7.562 6.6876.312 Period 22 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.2019.442 8.772 7.645 6.743 6.359 Period 23 20.456 18.292 16.444 14.857 13.48912.303 11.272 10.371 9.580 8.883 7.718 6.792 6.399 Period 24 21.243 18.914 16.936 15.247 13.79912.550 11.469 10.529 9.707 8.985 7.784 6.835 6.434 Period 25 22.023 19.523 17.413 15.622 14.09412.783 11.654 10.675 9.8239.077 7.843 6.873 6.464 Period 26 22.795 20.121 | 17.877 15.983 14.375 13.003 11.826 10.8109.929 9.161 7.896 6.906 6.491 Period 27 23.560 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 9.237 7.943 6.935 6.514 Period 28 24.31621.281 | 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 7.984 6.961 6.534 29 25.066 21.844 19.188 16.984 15.141 13.591 11.158 10.198 9.37 6.983 Period 30 25.808 22.396 19.600 17.292 15.372 13.765 12.409 11.258 10.274 9.427 8.055 | 7.0036.566 5.973 5.384 4.891 6.011 5.410 4.909 6.044 5.432 4.925 6.073 5.451 4.937 6.097 5.467 4.948 6.118 6.136 6.152 5.480 4.956 5.492 4.964 5.502 4.970 5104.975 5.517 4.979 6.177 Period 40 32.835 27.355 23.115 19.793 17.159 15.046 13.332 11.925 10.757 9.779 8.244 7.1056.642 6.233 5.548 4.997 Deriod 50 30 100 | 31 12 25 730 1 21 182 18.250116 7621 13 801 | 12 223 10 0621 9 015 8301 7133 AA1 216 5551 1 aaa Print Done x Reference Period 16 Period 17 Period 18 Period 19 Period 20 14./18 13.578 12.561 11.652 10.83810.1069.447 8.851 8.313 7.824 6.9746.265 15.562 14.292 13.166 12.166 11.274 10.4771 9.763 9.122 8.544 8.022 7.120 6.373 16.398 14.992 13.754 12.659 11.690 10.828 10.0599.372 8.756 8.201 7.250 6.467 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 7.366 6.550 18.046 16.351 14.877 13.590 12.462 11.470 10.594 9.818 9.129 8.514 7.469 6.623 5.954 6.047 6.128 6.198 6.259 5.669 5.749 5.818 5.877 5.929 5.162 4.730 5.222 4.775 5.273 4.812 5.3164.844 5.353 4.870 5.973 6.011 6.044 6.073 6.097 5.384 4.891 5.410 4.909 5.432 4.925 5.451 4.937 5.467 4.948 Period 21 18.857 17.011 15.415 14.029 12.821 11.764 10.836 10.0179.292 8.649 7.5626.687 6.312 Period 22 19.660 17.658 15.937 14.451 13.163 12.042 11.061 10.2019.442 8.772 7.645 6.743 6.359 Period 23 20.456 18.292 16.444 14.857 13.489 12.303 11.272 10.371 9.5808.883 7.718 6.792 6.399 Period 24 21.243 18.914 16.936 15.247 13.79912.550 11.469 10.529 9.707 8.985 7.784 6.835 6.434 Period 25 22.023 19.523 17.413 15.622 14.09412.783 11.654 10.675 9.8239.077 7.843 6.873 6.464 Period 26 22.795 20.121 | 17.87715.983 14.375 13.003 11.826 10.810 9.929 9.161 7.896 6.906 6.491 Period 27 23.560 20.707 18.327 16.330 14.643 13.211 11.987 10.935 10.027 9.237 7.943 6.935 6.514 Period 28 24.31621.281 18.764 16.663 14.898 13.406 12.137 11.051 10.116 9.307 7.984 6.9616.534 Period 29 25.066 21.844 19.188 16.984 15.141 13.591 12.278 11.158 10.198 9.370 8.022 6.983 6.551 Period 30 25.808 22.396 19.600 17.292 15.37213.765 12.409 11.258 10.274 9.427 8.055 | 7.003 6.566 6.118 5.480 4.956 6.136 5.492 4.964 6.152 5.502 4.970 6.166 5.510 4.975 6.1775.517 4.979 5.548 4.997 Period 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 Period 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 6.6616.246 5.554 4.999 Print Done