Your

grandfathergrandfather

would like to share some of

hishis

fortune with you.

HeHe

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

1.	$ 8 comma 750$8,750 a year at the end of each of the next sevenseven years
2.	$ 50 comma 250$50,250 (lump sum) now
3.	$ 98 comma 650$98,650 (lump sum) sevenseven years from now

Calculate the present value of each scenario using

anan

88%

interest rate. Which scenario yields the highest present value? Would your preference change if you used a

1212%

interest rate?

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(Click the icon to view the present value annuity factor table.)

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(Click the icon to view the present value factor table.)

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(Click the icon to view the future value annuity factor table.)

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(Click the icon to view the future value factor table.)

Using

anan

88%

interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar.)

		Present value
Scenario 1	=

Present Value of Annuity of $1 Perioas T70 TU70 0/71 0.877 0.893 Z0%0 470 070 070 1470 T070 10%0 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.862 0.833 0.847 2 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 3 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 4 3.902 3.808 4.713 3.717 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 4.452 5 4.853 4.580 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 6 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 4.868 4.564 4.288 4.039 3.812 3.605 7.325 6.733 5.335 4.968 4.639 4.344 7.652 7.020 6.463 6.210 5.747 4.078 3.837 9 8.566 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5.328 4.946 4.607 4.303 4.031 8.983 8.530 8.111 7.722 6.145 5.650 5.216 4.833 4.494 4.192 10 9.471 7.360 6.710 8.760 8.306 5.938 11 10.368 9.787 9.253 7.887 7.139 6.495 5.453 5.029 4.656 4.327 11.255 10.575 12.134 11.348 12 9.954 9.385 8.863 8.384 7.536 6.814 6.194 5.660 5.197 4.793 4.439 10.635 9.986 9.394 7.103 6.424 5.842 5.342 13 8.853 7.904 4.910 4.533 12.106 11.296 12.849 9.295 14 13.004 10.563 9.899 8.244 7.367 6.628 6.002 5.468 5.008 4.611 15 11.938 11.118 10.380 9.712 8.559 7.606 6.811 6.142 5.575 13.865 5.092 4.675 18.046 16.35114.877 22.023 19.52317.413 13.59012.462 15.622 14.09412.78310.675 17.292 15.372 13.765 20 8.514 7.469 6.623 5.929 11.470 9.818 5.353 4.870 25 9.077 7.843 6.873 6.097 5.467 4.948 30 25.808 32.835 27.355 | 23.115 | 19.793| 17.159 | 15.046. 22.396 19.600 11.258 9.427 8.055 7.003 6.177 5.517 4.979 11.925 9.779. 40 8.244 7.105 6.233 5.548. 4.997 Future Value of Annuity of $1 270 470 TU% 0%7I 1.000 Z0%0 Perioas 07 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1 1.000 1.000 1.000 1.000 1.000 2.180 2.020 2.030 2.040 2.060 2.080 2.100 3.310 2.120 2.140 2.160 2.200 2 2.010 2.050 3.030 3.060 3.091 3.122 3.153 3.184 3.246 3.374 3.440 3.506 3.572 3 3.640 4 4,060 4.184 4.246 4.310 4.375 4.506 4.641 4.779 4.921 5.066 5.215 4.122 5.368 5 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 8.923 7.716 8.115 8.536 8.977 9.442 9.930 6 7 7.214 7.434 7.662 7.898 8.142 8.394 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 13.233 14.240 15.327 16.499 20.799 25.959 9 9.369 10.462 9.755 10.950 10.159 10.583 12.006 11.027 11.491 13.181 12.488 13.579 14.776 17.549 16.085 17.519 19.086 11.464 12.578 21.321 10 14.487 15.937 19.337 23.521 11 11.567 12.169 12.808 13.486 14.207 14.972 16.870 16.645 18.531 20.655 24.133 23.045 25.733 28.755 32.150 12.683 13.412 12 14.192 15.026 15.917 17.713 18.977 21.384 27.271 30.850 36.786 34.931 42.219 39.581 14.680 16.627 21.495 13 13.809 15.618 18.882 24.523 28.029 32.089 48.497 14 15.974 18.292 21.015 24.215 32.393 59.196 14.947 17.086 19.599 27.975 37.581 43.672 50.818 15 16.097 17.293 18.599 20.024 21.579 23.276 27.152 31.772 43.842 51.660 60.965 72.035 37.280 20 22.019 24.297 26.870 29.778 33.066 36.786 45.762 57.275 72.052 91.025 115.380 146.628 186.688 25 28.243 32.030 36.459 47.727 73.106 41.646 54.865 98.347 133.334 181.871 249.214 342.603 471.981 30 34.785 48.886 40.568 47.575 56.085 66.439 79.058 113.283 164.494 241.333 356.787 530.312 790.948 1,181.882 | 1.342.025| 2. 360.757. | 4.163.213 | 7.343.858. 60.402 75.401 120.800 442.593 767 091 40 95.026 154.762. 259.057 Present Value of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% 0.990 0.862 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.847 0.833 1 2 0.980 0.961 0.943 0.925 0.907 0.890 0.857 0.826 0.797 0.769 0.743 0.718 0.694 0.971 0.942 0.915 0.889 0.864 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 4 0.961 0.924 0.888 0.855 0.823 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.482 0.951 0.906 0.863 0.822 0.784 0.747 0.681 0.621 0.567 0.519 0.437 0.402 0.476 6 0.942 0.888 0.837 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.335 0.711 7 0.933 0.871 0.813 0.760 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.279 8 0.923 0.677 0.627 0.540 0.467 0.404 0.351 0.266 0.233 0.853 0.789 0.731 0.305 0.914 0.837 0.766 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.263 0.225 0.194 0.162 10 0.905 0.820 0.744 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.227 0.191 11 0.896 0.804 0.722 0.650 0.585 0.527 0.429 0.350 0.287 0.237 0.195 0.162 0.135 12 0.788 0.497 0.112 0.887 0.701 0.625 0.557 0.397 0.319 0.257 0.208 0.168 0.137 13 0.879 0.773 0.681 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 14 0.870 0.758 0.160 0.661 0.577 0.505 0.442 0.340 0.263 0.205 0.125 0.099 0.078 15 0.743 0.642 0.861 481 0.417 315 .084 .065 20 0.820 0.673 0.554 0.456 0.377 0.312 0.215 0.149 0.104 0.073 0.051 0.037 0.026 25 0.780 0.610 0.233 0.146 0.092 0.016 0.010 0.478 0.375 0.295 0.231 0 142 0.059 0.038 0.024 30 0.742 0.552 0.412 0 307 0.308 0.174 0.099 0 046. 0.057 0.033 0.020 0.012 0.007 0.001. 0.004 40 0672 0453 0208 0.n97. 0.022. 0011 0.005 0.003 0.001 Future Value of $1 1270 2070 Perioas 17c 470 070 070 1470 107 107 1.030 1.080 1.120 1.200 1 1.010 1.020 1.040 1.050 1.060 1.100 1.140 1.160 1.180 1.392 1.020 1.040 1.061 1.103 1.124 1.166 1.260 1.360 1.210 1.254 1.346 1.440 1.082 1.300 3 1.030 1.061 1.093 1.125 1.170 1.158 1.191 1.262 1.331 1.464 1.405 1.482 1.561 1.643 1.939 1.728 4 1.041 1.082 1.126 1.216 1.574 1.689 1.811 2.100 2.074 1.159 1.051 1.104 1.217 1.338 1.469 1.611 1.925 2.288 5 1.276 1.762 2.488 1.126 1.194 1.265 1.419 1.772 2.195 2.436 2.700 6 1.062 1.340 1.587 1.974 2.986 1.149 2.211 7 1.072 1.230 1.316 1.407 1.504 1.594 1.714 1.949 2.502 2.826 3.185 3.759 3.583 1.172 2.476 1.083 1.267 1.369 1.477 851 2.144 2.853 3.278 4.300 2.773 5.160 9 1.094 1.195 1.305 1.423 1.551 1.689 1.999 2.358 3.252 3.803 4.435 10 1.105 1.219 1.344 1.480 1.629 1.791 2.159 2.594 3.106 3.707 4.411 5.234 6.192 1.116 1.243 1.539 1.898 2.332 4.226 6.176 11 1.384 1.710 2.853 3.479 5.117 7.430 1.426 4.818 5.936 12 1.127 1.268 1.601 1.796 2.012 2.518 3.138 3.896 7.288 8.916 13 1.138 1.149 1.294 1.319 1.469 1.513 1,665 1,732 1.886 1.980 2.133 2.261 2.397 2.720 3.452 4.363 5.492 6.261 7.138 6.886 7.988 9.266 8.599 10.699 12.839 15.407 3.797 14 2.937 4.887 10.147 15 1.161 1.346 1.558 1.801 2.079 3.172 4.177 5.474 11.974 1.220 1.486 3.207 4.292 20 1.806 2.191 2.653 4.661 6.727 9.646 13.743 19.461 27.393 62.669 38.338 1.282 1.641 3.386 25 30 2.094 2.666 6.848 10.835 17.449 17.000 26.462 40.874 95.396 1.811 3.243 5.743 1.348 2.427 4.322 10.063 29.960 50.950 85.850 143.371 237.376 40 1.489 2.208 4.801 10.286. 45.259. 1.469.772 3.262 7.040 21.725 93.051. 188.884 378.721 750.378