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. $7,750 per year at the end of each of the next seven years 2. $50,050 (lump sum) now 3. $98,150 (lump sum) seven 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 a 6% 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.) Value Scenario 1: Scenario 2: Scenario 3: appears to be the best option. Based on a 6% 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.) Present Value Scenario 1: Scenario 2: Scenario 3: appears to be the best option. Based on a 12% interest rate, its present value is the Enter any number in the edit fields and then continue to the next question. Reference 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 4% 0.962 0.925 0.889 0.855 0.822 5% 0.952 0.907 0.864 0.823 0.784 6% 0.943 0.890 0.840 0.792 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% 0.917 0.842 0.772 0.708 0.650 10% 0.909 0.826 0.751 0.683 0.621 12% 0.893 0.797 0.712 0.636 0.567 14% 0.877 0.769 0.675 0.592 0.519 15% 0.870 0.756 0.658 0.572 0.497 16% 0.862 0.743 0.641 0.552 0.476 18% 0.847 0.718 0.609 0.516 0.437 20% 0.833 0.694 0.579 0.482 0.402 6 0.837 7 8 9 0.942 0.933 0.923 0.914 0.905 0.888 0.871 0.853 0.837 0.820 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 0.666 0.623 0.582 0.544 0.508 0.630 0.583 0.540 0.500 0.463 0.596 0.547 0.502 0.460 0.422 0.564 0.513 0.467 0.424 0.386 0.507 0.452 0.404 0.361 0.322 0.456 0.400 0.351 0.308 0.270 0.432 0.376 0.327 0.284 0.247 0.410 0.354 0.305 0.263 0.227 0.370 0.314 0.266 0.225 0.191 0.335 0.279 0.233 0.194 0.162 10 11 12 13 14 15 0.896 0.887 0.879 0.870 0.861 0.722 0.701 0.681 0.661 0.642 0.650 0.625 0.601 0.577 0.804 0.788 0.773 0.758 0.743 0.728 0.714 0.700 0.686 0.585 0.557 0.530 0.505 0.481 0.527 0.497 0.469 0.442 0.417 0.429 0.397 0.368 0.340 0.315 0.475 0.444 0.415 0.388 0.362 0.339 0.317 0.296 0.277 0.388 0.356 0.326 0.299 0.275 0.287 0.257 0.229 0.205 0.350 0.319 0.290 0.263 0.239 0.237 0.208 0.182 0.160 0.140 0.215 0.187 0.163 0.141 0.123 0.195 0.168 0.145 0.125 0.108 0.555 0.135 0.112 0.093 0.078 0.065 0.162 0.137 0.116 0.099 0.084 0.071 0.060 0.051 0.043 0.183 0.458 0.123 0.292 0.270 16 17 18 19 0.853 0.844 0.836 0.828 0.623 0.605 0.587 0.570 0.534 0.513 0.494 0.475 0.436 0.416 0.396 0.394 0.371 0.350 0.331 0.252 0.231 0.212 0.194 0.218 0.198 0.180 0.164 0.163 0.146 0.130 0.116 0.107 0.093 0.081 0.070 0.108 0.095 0.083 0.093 0.080 0.069 0.060 0.054 0.045 0.038 0.031 0.250 0.232 Print Done Reference Periods 2 12% 0.893 1.690 2.402 3.037 3.605 14% 0.877 1.647 2.322 2.914 3.433 15% 0.870 1.626 2.283 2.855 3.352 16% 0.862 1.605 2.246 2.798 3.274 18% 0.847 1.566 2.174 2.690 3.127 20% 0.833 1.528 2.106 2.589 2.991 5 6.002 6 7 8 9 10 Present Value of Ordinary Annuity of $1 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 1.970 1.942 1.913 1.886 1.859 1.833 1.808 1.783 1.759 1.736 2.941 2.884 2.829 2.775 2.723 2.673 2.624 2.577 2.531 2.487 3.902 3.808 3.717 3.630 3.546 3.465 3.387 3.312 3.240 3.170 4.853 4.713 4.580 4.452 4.329 4.212 4.100 3.993 3.890 3.791 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.623 4.486 4.355 6.728 6.472 6.230 5.786 5.582 5.389 5.206 5.033 4.868 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.747 5.535 5.335 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.995 5.759 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 10.368 9.787 9.253 8.760 8.306 7.887 7.499 7.139 6.805 6.495 11.255 10.575 | 9.954 9.385 8.863 8.384 7.943 7.536 7.161 6.814 12.134 | 11.348 10.635 | 9.986 9.394 8.853 8.358 7.904 7.487 7.103 13.004 12.106 11.296 10.563 8.244 7.786 7.367 13.865 12.849 11.938 11.118 10.380 9.712 9.108 8.559 8.061 7.606 14.718 13.578 12.561 11.652 10.838 10.106 9.447 8.851 8.313 7.824 15.562 14.292 13.166 12.166 11.274 10.477 9.763 9.122 8.544 8.022 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.372 8.756 8.201 17.226 15.678 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 4.111 4.564 4.968 5.328 5.650 3.889 4.288 4.639 4.946 5.216 3.784 4.160 4.487 4.772 5.019 3.685 4.039 4.344 4.607 4.833 3.498 3.812 4.078 4.303 4.494 3.326 3.605 3.837 4.031 4.192 11 12 13 14 15 5.938 6.194 6.424 6.628 6.811 5.453 5.660 5.842 6.002 6.142 5.234 5.421 5.583 5.724 5.847 5.029 5.197 5.342 4.656 4.793 4.910 4.327 4.439 4.533 4.611 4.675 9.899 9.295 8.745 5.468 5.008 5.575 5.092 16 17 18 19 6.974 7.120 7.250 7.366 6.265 6.373 6.467 6.550 5.954 6.047 6.128 6.198 5.669 5.749 5.818 5.877 5.162 5.222 5.273 5.316 4.730 4.775 4.812 4.844 Print Done i Requirements 1. Calculate the present value of each scenario using a 6% 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? Print Done