Your grandfather would like to share some of his

his fortune with you.

He offers to give you money under one of the following scenarios(you get tochoose):

1.

$7,550 a year at the end of each of the next eight years

2.

$49,950 (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 presentvalue? Would your preference change if you used a

12% interestrate?