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 a year at the end of each of the next eight years 2. $49,650 (lump sum) now 3. $100,050 (lump sum) eight years from now Calculate the present value of each scenario using a 6% interest rate. Which scenario yields the highest present value? Would your preference change if you used a 10% interest rate? I Present Value of Annuity of $1 16% 0.862 1.805 2.246 2.798 3274 18% 0847 1 588 2174 2690 3.127 20% 0833 1.528 2.106 2589 2.991 Present Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 Period 2 1.970 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 Period 3 2.941 2884 2.829 2.775 2.722 2.673 2.577 2.487 2.402 2.322 Period 4 3.902 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2914 Period 5 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 Period 6 5.795 5.601 5.417 5.242 5.076 4.917 4623 4.355 4.111 3.889 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.206 4.868 4.564 4.288 Period 8 7.652 7.325 7.020 6.733 6.463 6.210 5.7475.335 4.968 4.639 Period 9 8.566 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5.328 4.946 Period 10 9.471 8.983 8.530 8.111 7.722 7.360 6.710 6.145 5.650 5.216 Period 11 10.368 9.787 9.253 8.760 8.306 7.887 7.139 6.495 5.938 5.453 Period 12 11.255 10.575 9.954 9.385 8.863 8.384 7.536 6.814 6.194 5.660 Period 13 12.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 5.842 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 6.002 6.142 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 6.623 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.5147.469 6.873 Period 25 22.023 19.523 17 413 15.622 14.09412.783 10.675 9.077 7.843 Period 30 25.80822.396 19.600 17.292 15.372 13.765 11.258 9.427 8.055 7.003 7 105 Period 40 32.835 27 355 23.115 19.793 17 159 15.046 11.925 9.779 8.244 3.685 4.039 4 344 4.607 4.833 3.498 3.812 4 078 4 303 4.494 3326 3.605 3837 4.031 4 192 5029 5.197 5.342 5.488 5.575 4656 4.793 4.910 5.008 5092 4327 4.439 4.533 4.611 4.675 5.929 6.097 6.177 6.233 5.353 5.467 5.517 5.548 4.870 4.948 4.979 4997 Present Value of $1 Present Value of $1 ra 20% Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 0.990 0.980 0.971 0.961 0.951 2% 0.980 0.961 0.942 0.924 0.906 3% 0.971 0.943 0.915 0.888 0.863 4% 0.962 0.925 0.889 0.855 0.822 5% 0.952 0.907 0.864 0.823 0.784 6% 8% 10% 0.943 0.926 0.909 0.890 0.857 0.826 0.840 0.794 0.751 0.792 0.735 0.683 0.747 0.681 0.621 12% 14% 16% 18% 0.893 0.877 0.862 0.847 0.797 0.769 0.743 0.718 0.712 0.675 0.641 0.609 0.636 0.592 0.5520 516 0.567 0.519 0.476 0.437 0.833 0.694 0.579 0.482 0.402 er Period 6 0.942 Period 7 0.933 Period 8 0.923 Period 9 0.914 Period 10 0.905 0.888 0.871 0.853 0.837 0.820 0.837 0.813 0.789 0.766 0.744 0.790 0.760 0.731 0.703 0.676 0.746 0.711 0.677 0.645 0.614 0.705 0.665 0.627 0.592 0.558 0.630 0 583 0.540 0.500 0.463 0.564 0.518 0.467 0.424 0.386 0.507 0.456 0.452 0.400 0.404 0.351 0.361 0.308 0.322 0.270 0.410 0.354 0.305 0.263 0.227 0370 0314 0.266 0 225 0.191 0.335 0.279 0.233 0.194 0.162 Period 11 0.896 Period 12 0.887 Period 13 0.879 Period 14 0.870 Period 15 0.861 0.804 0.788 0.773 0.758 0.743 0.722 0.701 0.681 0.661 0.642 0.650 0.585 0.625 0.557 0.601 0.530 0.577 0.505 0.555 0.481 0.527 0.497 0.469 0.442 0.417 0.429 0.397 0.368 0.340 0.315 0.350 0.319 0.290 0.263 0.239 0.287 0.237 0.195 0.162 0.135 0.257 0.208 0.168 0.137 0.112 0.229 0.182 0.145 0 116 0.093 0.205 0.160 0.125 0.099 0.078 0.183 0.140 0.108 0.084 0.065 Period 20 0.820 Period 25 0.780 Period 30 0.742 Period 40 0.672 0.673 0.610 0.552 0.453 0.554 0.478 0.412 0.307 0.456 0.375 0.308 0.208 0.377 0.312 0.295 0.233 0.231 0.174 0.142 0.097 0.215 0.146 0.099 0.046 0.149 0.092 0.057 0.022 0.104 0.073 0.051 0.037 0.026 0.059 0.038 0.024 0.016 0.010 0.033 0.0200.0120.007 0.004 0.011 0.005 0.003 0.001 0.001 Print Done ints: 0 of 2 Future Value of Annuity of $1 Periods Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 Period 7 Period 8 Period 9 Period 10 Future Value of Annuity of $1 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1 000 2.010 2020 2.030 2.040 2.050 2.060 2.080 2.100 2.120 2.140 2.160 2180 2 200 3.030 3.060 3.091 3.122 3.153 3.184 3.246 3.310 3.374 3.440 3.506 3.572 3.640 4.060 4 122 4.184 4.246 4.310 4.375 4 506 4.641 4.779 4.921 5.066 5.215 5.368 5.101 5.204 5.309 5.416 5.526 5.637 5.867 6.105 6.353 6.610 6 877 7.154 7.442 6.152 6.308 6.468 6.633 6.802 6.975 7.336 7.716 8.115 8.536 8.977 9.442 9.930 7.214 7.434 7.662 7.898 8.142 8,394 8.923 9.487 10.089 10.730 11.414 12.142 12.916 8.286 8.583 8.892 9.214 9.549 9.897 10.637 11.436 12.300 13233 14.240 15 327 16.499 9.369 9.755 10.159 10.583 11.027 11.491 12.488 13.579 14.776 16.085 17 519 19.088 20799 10.462 10.950 11.464 12.006 12.578 13.18114 4871593717 549 19.337 21.321 23.521 25.959 11.567 12.169 12.808 13.486 14.207 14.972 16.645 18.531 20.655 23.045 25.733 28.755 32.150 12.683 13.412 14.192 15.026 15.917 16.870 18.977 21.38424.133 27.271 30.850 34.931 39,581 13.809 14.680 15.618 16.627 17.713 18.882 21.495 24.523 28.029 32 089 36.786 42 219 48497 14 947 15.974 17.086 18.29219.599 21.015 24.215 27 975 32 393 37581 43.672 50.818 59 196 16.097 17 29318.599 20.024 21 579 23 276 27.152 31.772 37 280 43.842 51.680 60.965 72.035 115 380 22.019 24.297 26.870 29.778 33,066 36.786 45.762 57.275 72.052 91.025 146.628 186 688 249 214 342603 28.243 32.03036.459 41.646 47.727 54.865 73.106 98.347 133.334 181.871 471 981 530.312 790.948 1,181.882 34.785 40.568 47.575 56,085 66.43979.058 113.283 164.494 241.333 356.787 48.886 60.402 75.401 95.026 120.800 154.762 259.057442 593 767.091 1,342 025 2,380.757 4.163 213 7.343.858 Period 11 Period 12 Period 13 Period 14 Period 15 Period 20 Period 25 Period 30 Period 40 Print Done Future Value of $1 Future Value of $1 Periods Period 1 Period 2 Period 3 Period 4 Period 5 1% 1.010 1.020 1.030 1.041 1.051 2% 1.020 1040 1.061 1.082 1.104 3% 1.030 1.061 1.093 1.126 1.159 4% 1.040 1.082 1.125 1.170 1.217 5% 1.050 1.103 1.158 1.216 1.276 Period 6 Period 7 Period 8 Period 9 Period 10 1.062 1.072 1.083 1.094 1.105 1.126 1.149 1.172 1.195 1.219 1.194 1.230 1.267 1.305 1.344 1.265 1.316 1.369 1.423 1.480 1.340 1.407 1.477 1.551 1.629 6% 8% 10% 12% 14% 16% 18% 20% 1.060 1.080 1.100 1.120 1.140 1.160 1.180 1.200 1.124 1.166 1.210 1.254 1.300 1.346 1 392 1.440 1.191 1 280 1331 1.405 1.482 1.561 1.643 1728 1.262 1.360 1.464 1.574 1.689 1.811 1.939 2.074 1.338 1.469 1.611 1.762 1.925 2.100 2 288 2488 1.419 1.587 1.772 1.974 2.195 2436 2.700 2.986 1.504 1714 1.949 2211 2.502 2 826 3.185 3583 1.594 1.851 2.144 2.476 2.853 3 278 3.759 4.300 1.689 1.999 2.358 2.773 3.252 3.803 4.435 5.160 1.791 2.159 2.594 3.106 3.707 4.411 5.234 6.192 1.898 2.332 2.853 3.479 4.226 5.117 6.176 7.430 2.012 2.518 3.138 3.896 4.818 5.936 7.288 8.916 2.133 2.720 3 452 4.363 5.492 6.886 8 599 10.699 2.261 2.937 3,797 4.887 6.261 7.988 10.147 12.839 2.397 3.172 4.177 5.474 7.138 9.266 11.974 15.407 3.207 4.661 6.727 9.646 13.743 19.461 27393 38 338 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 5.743 10.063 17.449 29.960 50.950 85.850 143 371 237376 10.286 21.725 45.259 93.051 188.884 378.721 750.378 1.469.772 Period 11 Period 12 Period 13 Period 14 Period 15 1.116 1.127 1.138 1.149 1.161 1.243 1.268 1.294 1.319 1.346 1384 1.426 1.469 1.513 1.558 1.539 1.601 1.665 1.732 1.801 1.710 1.796 1.886 1.980 2.079 Period 20 Period 25 Period 30 Period 40 1.220 1.282 1.348 1.489 1.486 1.641 1.811 2.208 1.806 2.094 2.427 3.262 2. 191 2.666 3.243 4.801 2653 3.386 4.322 7,040 Print Done