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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
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. $8,750 per year at the end of each of the next eight years 2. $50,050 (lump sum) now 3. $100,050 (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 = V 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, X.XXX. Round the present value to the nearest whole dollar.) Scenario 1, 12% discount rate, Present value = 12% rate Prese Scenario 3, 12% discount rate, Present value = appears to be the best option. Based on a 12% interest rate, its present value is the Requirements 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
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