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 a year at the end of each of the next eight years 2. $50,050 (lump sum) now 3. $100,250 (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? (Click the icon to view the present value annuity factor table) (Click the icon to view the present value factor table) (Click the icon to view the future value annuity factor table.) (Click the icon to view the future value factor table.) Using a 6% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar) Present value Scenario 1 Scenario 2 = Scenario 3 Which scenario yields the highest present value? appears to be the best option. Based on a 6% interest rate, its present value is the i Present Value of Annuity of $1 Periods 2% 1 2 3 4 5 6 8 9 10 Present Value of Annuity of $1 1% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 1.970 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 1.605 1.566 1.528 2.941 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 2.322 2.246 2.174 2.106 3.902 3.808 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 3.889 3.685 3.498 3.326 6.728 6.472 6.230 6.002 5.786 5.582 5.206 4.8684.564 4.288 4.039 3.812 3.605 7.652 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4.968 4.639 4.344 4.078 3.837 8.566 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5.328 4.946 4.607 4.031 9.471 8.983 8.530 8.111 7.722 7.360 6.710 6.145 5.650 5.216 4.833 4.494 4.192 10.368 9.787 9.2538.760 8.306 7.887 7.139 6.495 5.938 5.453 5.029 4.656 4.327 11.255 10.575 9.954 9.385 8.863 8.384 7.536 6.814 6.194 5.660 5.197 4.793 4.439 12.134 11.348 10.635 9.986 9.394 8.853 7.904 7.103 6.424 5.842 5.342 4.910 4.533 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 6.002 5.468 5.008 4.611 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 6.142 5.575 5.092 4.675 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.469 6.623 5.929 5.353 4.870 22.023 19.523 17 413 15.622 14.094 12.783 10.675 9.077 7.843 6.873 6.097 5.467 4.948 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.427 8.055 7.003 6.177 5.517 4.979 32.835 27.355 23.115 19.793 17 159 15.046 11.925 9.779 8.244 7.105 6.233 5.548 4.997 4.303 11 12 13 14 15 20 25 30 40 Print Done Periods 1 2 1% 1.000 2.010 3.030 4.060 5.101 2% 1.000 2.020 3.080 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 4% 1.000 2040 3.122 4.246 5.416 12% 1.000 2.120 3.374 4.779 6.353 3 4 5 8.115 10,089 6 7 B 9 10 6.308 7.434 8.583 9.755 10.950 12,300 14.776 17,549 6.152 7214 8.286 9.369 10.462 11.567 12.683 13 809 14 947 16097 22019 28 243 34.785 48.886 Future Value of Annuity of $1 5% 6% 8% 10% 1.000 1000 1.000 1.000 2.050 2060 2080 2.100 3.153 3.184 3.246 3.310 4.310 4.375 4.506 4.641 5.526 5.637 5.867 6.105 6.802 6.975 7.336 7.716 8.142 8.394 8.923 9.487 9.549 9.897 10.637 11.436 11.027 11.491 12.488 13.579 12578 13.181 14487 15.937 14207 14.972 16.645 18.531 15.917 16.870 18.977 21.384 17.713 18.882 21495 24523 19.599 21.015 24 215 27975 21.579 23.276 27.152 31.772 33.066 36.786 45.762 57 275 47727 54.865 73.106 98.347 66.439 79.058 113283 164 494 120 800 154.762 259,057 442593 11 12 13 14 15 6.468 7.662 8.892 10.159 11464 12.800 14.192 15,618 17086 18.599 26 870 36.459 47.575 75.401 14% 16% 18% 20% 1.000 1.000 1.000 1.000 2.140 2.160 2.180 2 200 3.440 3.506 3.572 3.640 4.921 5,056 5215 5.368 6.610 6.877 7.154 7.442 8.536 8.977 9.442 9930 10.730 11414 12 142 12916 13233 14.240 15327 16.499 16 ORS 17.519 19.086 20.799 19337 21.321 23.521 25.959 23.045 25.733 28.755 32.150 27.271 30.850 34931 39.531 32089 36.786 42219 48.497 37581 43.672 50.818 59.196 43842 51.660 60965 72035 91025 115.380 146.628 186.688 181.871 249.214 342603 471,981 356.787 530.312 790 948 1,181.882 1,342 025 2.360 757 4,163.213 7.343.858 6.633 7.898 9.214 10.583 12.006 13.486 15026 16.627 18.292 20.024 29.778 41.646 56.085 95.026 12.169 13.412 14.680 15.974 17.293 24.297 32030 40.568 60.402 20.655 24.133 28.029 32393 37.280 72052 133 334 241 333 767091 20 25 30 40 Print Done e annuity annuity to Periods 1 2 3 4 14% 1.140 ent value 2% 1.020 1.040 1.061 1.082 3% 1.000 1.061 1.093 1.126 1.159 5% 1.050 1.103 1.158 1.216 1.276 10% 1.100 1210 1.331 1464 1.611 1.300 1.482 4% 1.040 1.082 1.125 1.170 1.217 1.265 1.316 1.369 1.423 1.480 16% 1160 1.346 1.561 1.811 2.100 18% 1.180 1.392 1.643 1.939 2.288 5 1.104 1.689 1925 2.195 2502 6 7 1.194 1.230 1.267 1.305 1.344 1.772 1.949 2.144 2.358 1% 1.010 1.020 1.030 1.041 1.051 1.062 1.072 1.083 1.094 1.105 1.116 1.127 1.138 1.149 1.161 1.220 1.282 1.348 1.489 2853 Future Value of $1 6% 8% 1.060 1.080 1.124 1.166 1.191 1.260 1.262 1.360 1.338 1.469 1.419 1.587 1.504 1.714 1,594 1.851 1.689 1.999 1.791 2.159 1.898 2.332 2012 2.518 2.133 2.720 2.261 2937 2.397 3.172 3207 4.661 4.292 6.848 5.743 10.063 10.286 21.725 1296 1.120 1.254 1.405 1.574 1.762 1.974 2.211 2.476 2.773 3.106 3.479 3.896 4.363 4.887 5.474 2.436 2826 3.278 3.803 4.411 9 10 2.700 3.185 3.759 4.435 5.234 1.126 1.149 1.172 1.195 1.219 1.243 1.268 1.294 1.319 1.346 3.252 3.707 alue? 1.340 1.407 1.477 1.551 1.629 1.710 1.796 1.886 1.980 2079 2594 2853 3.138 20% 1 200 1.440 1.728 2074 2488 2988 3.583 4300 5.160 6.192 7.430 8916 10.699 12.839 15.407 38.338 95 396 237 378 1,469.772 Based o 11 12 13 14 15 1.384 1.426 1.469 1.513 1.558 1.539 1.601 1.665 1.732 1.801 3.452 3.797 4.177 sent valul 4.226 4.818 5.492 6.261 7.138 13.743 26.462 50.950 188.884 5.117 5.938 6.886 7.988 9.266 19.461 40.874 85 850 378.721 6.176 7.288 8.599 10.147 11.974 20 25 30 40 1.486 1.641 1.811 2.208 1.806 2094 2.427 3.262 2.191 2.666 3243 4.801 2.653 3.386 4.322 7.040 6.727 10.835 17 449 45.250 9.646 17.000 29.960 93.051 27.393 62.669 143.371 750.378 en conti Present Value of $1 Periods 1 2 3 4 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 0.837 0.813 0.789 0.766 0.744 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 6 7 8 9 10 0.888 0.871 0.853 0.837 0.820 Present Value of $1 4% 5% 6% 8% 10% 0.962 0.952 0.943 0.926 0.909 0.925 0.907 0.890 0.857 0.826 0.889 0.864 0.840 0.794 0.751 0.855 0.823 0.792 0.735 0.683 0.822 0.784 0.747 0.681 0.621 0.790 0.746 0.705 0.630 0.564 0.760 0.711 0.665 0.583 0.513 0.731 0.677 0.627 0.540 0.467 0.703 0.645 0.592 0.500 0.424 0.676 0.614 0.558 0.463 0.386 0.650 0.585 0.527 0.429 0.350 0.625 0.557 0.497 0.397 0.319 0.601 0.530 0.469 0.388 0.290 0.577 0.505 0.442 0.340 0.263 0.555 0.481 0.417 0.315 0.239 0.456 0.377 0.312 0.215 0.149 0.375 0.295 0.233 0.146 0.092 0.308 0.231 0.174 0.099 0.057 0.208 0.142 0.097 0.046 0.022 0.942 0.933 0.923 0.914 0.905 0.896 0.887 0.879 0.870 0.861 0.820 0.780 0.742 0.672 14% 16% 18% 20% 0.877 0.882 0.847 0.833 0.789 0.743 0.718 0.894 0.675 0.841 0.609 0.579 0.592 0.552 0.516 0482 0.519 0476 0437 0402 0.456 0410 0.370 0.335 0.400 0.354 0.314 0.279 0.351 0.305 0.286 0.233 0.308 0.263 0.225 0.194 0.270 0.227 0.191 0.162 0.237 0.195 0.162 0.135 0.208 0.168 0.137 0.112 0.182 0.145 0.116 0.093 0.160 0.125 0.099 0.078 0.140 0.108 0.084 0.065 0.073 0.051 0.037 0.026 0.038 0.024 0.016 0.010 0.020 0.012 0.007 0.004 0.005 0.003 0.001 0.001 11 12 13 14 15 0.804 0.788 0.773 0.758 0.743 0.722 0.701 0.681 0.661 0.642 0.287 0.257 0.229 0.205 0.183 20 25 30 40 0.673 0.610 0.552 0.453 0.554 0.478 0.412 0.307 0.104 0.059 0.033 0.011 est Using a 10% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar) Present value Scenario 1 Scenario 2 Scenario 3 appears to be the best option. Based on a 10% interest rate, its present value is the Enter any number in the edit fields and then continue to the next