Your grandmother would like to share some of her fortune with you. She 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 seven years 2. $48,750 (lump sum) now 3. $99,350 (lump sum) seven 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 12% 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? V appears to be the best option. Based on a 6% interest rate, its present value is the Using a 12% 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 12% interest rate, its present value is the A pre Present Value of Annuity of $1 Future Value of Annuity of $1 Present Value of Annuity of $1 Future Value of Annuity of $1 Periods Periods 4% 5% 6% 8% 0.926 1.783 2.577 3.312 3.993 10% 0.909 1.736 2.487 3.170 3.791 12% | 14% 0.893 0.877 1.6901.647 2.402 2.322 3.037 2.914 3.605 3.433 | 16% 0.862 1.605 2.246 2.798 3.274 | 18% 0.847 1.566 2.174 2.690 3.127 0 1 0 0 1% 1.000 2.010 3.030 4.060 5.101 2% 1.000 2.020 3.060 4.122 5.204 3% 1.000 2.030 3.091 4.184 5.309 1.000 2.040 3.122 4.246 5.416 1.000 2.050 3.153 4.310 5.526 1.000 2.060 3.184 4.375 5.637 8% 1.000 2.080 3.246 4.506 5.867 10% 1.000 2.100 3.310 4.641 6.105 12% 1.000 2.120 3.374 4.779 6.353 14% 1.000 2.140 3.440 4.921 6.610 16% 1.000 2.160 3.506 5.066 6.877 18% 1.000 2.180 3.572 5.215 7.154 20% 1.000 2.200 3.640 5.368 7.442 1% 2% 3% 4% 5% 6% 1 0.990 0.980 0.971 0.962 0.952 0.943 1.970 1.942 1.913 1.886 1.859 1.833 2.941 2.884 2.829 2.775 2.723 2.673 3.902 3.808 3.717 3.630 3.546 3.465 4.853 4.713 4.580 4.452 4.329 4.212 5.795 5.601 5.417 5.242 5.076 4.917 6.728 6.472 6.230 6.002 5.786 5.582 7.652 7.325 7.020 6.733 6.463 6.210 8.566 8.162 7.786 7.435 7.108 6.802 9.471 8.983 8.530 8.111 7.722 7.360 10.368 9.787 9.2538.760 8.306 7.887 11.255 9.954 9.385 8.863 8.384 12.134 11.348 10.635 | 9.986 9.394 8.853 13.004 | 12.106 | 11.296 10.563 | 9.899 9.295 13.865 12.849 11.938 11.118 10.380 9.712 18.046 16.351 14.877 13.590 12.462 11.470 22.023 19.523 17.413 15.622 14.094 12.783 25.808 22.396 19.600 17.292 15.372 13.765 32.835 27.355 23.115 19.793 17.159 15.046 4.623 5.206 5.747 6.247 6.710 4.355 4.868 5.335 5.759 6.145 4.111 4.564 4.968 5.328 5.650 3.889 4.288 4.639 4.946 5.216 3.685 4.039 4.344 4.607 4.833 20% 0.833 1.528 2.106 2.589 2.991 3.326 3.605 3.837 4.031 4.192 4.327 4.439 4.533 4.611 4.675 4.870 4.948 4.979 4.997 3 0 0 1 0 6.308 7.434 8.583 9.755 10.950 6.468 7.662 8.892 10.159 11.464 6.633 7.898 9.214 10.583 12.006 6.802 8.142 9.549 11.027 12.578 7.336 8.923 10.637 12.488 14.487 7.716 9.487 11.436 13.579 15.937 8.115 10.089 12.300 14.776 17.549 8.536 10.730 13.233 16.085 19.337 8.977 11.414 14.240 17.519 21.321 9.442 12.142 15.327 19.086 23.521 6.152 7.214 8.286 9.369 10.462 11.567 12.683 13.809 14.947 16.097 6.975 8.394 9.897 11.491 13.181 14.972 16.870 18.882 21.015 23.276 9.930 12.916 16.499 20.799 25.959 32.150 39.581 48.497 59.196 72.035 3 3.498 3.812 4.078 4.303 4.494 4.656 4.793 4.910 5.008 5.092 5.353 5.467 5.517 5.548 7.139 7.536 7.904 8.244 8.559 9.818 10.675 11.258 11.925 6.495 5.938 6.814 6.194 7.103 6.424 7.367 6.628 7.606 6.811 8.514 7.469 9.077 7.843 9.427 | 8.055 9.779 8.244 5.453 5.660 5.842 6.002 6.142 6.623 6.873 7.003 7.105 5.029 5.197 5.342 5.468 5.575 5.929 6.097 6.177 6.233 12.169 13.412 14.680 15.974 17.293 12.808 14.192 15.618 17.086 18.599 13.486 15.026 16.627 18.292 20.024 14.207 15.917 17.713 19.599 21.579 16.645 18.977 21.495 24.215 27.152 18.531 21.384 24.523 27.975 31.772 20.655 24.133 28.029 32.393 37.280 23.045 27.271 32.089 37.581 43.842 0 25.733 30.850 36.786 43.672 51.660 28.755 34.931 42.219 50.818 60.965 8 8 3 22.019 28.243 34.785 48.886 24.297 32.030 40.568 60.402 26.870 36.459 47.575 75.401 29.778 41.646 56.085 95.026 33.066 47.727 66.439 120.800 36.786 54.865 79.058 154.762 45.762 73.106 113.283 259.057 57.275 98.347 164.494 442.593 72.052 133.334 241.333 767.091 91.025 181.871 356.787 1,342.025 115.380 249.214 530.312 2,360.757 146.628 342.603 790.948 4,163.213 186.688 471.981 1,181.882 7,343.858 Present Value of $1 1 Future Value of $1 Present Value of $1 Future Value of $1 Periods Periods 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 12% 0.893 0.797 0.712 0.636 0.567 14% 0.877 0.769 0.675 0.592 0.519 16% 0.862 0.743 0.641 0.552 0.476 18% 20% 0.847 0.833 0.7180.694 0.609 0.579 0.516 0.482 0.437 0.402 1% 1.010 1.020 1.030 1.041 1.051 2% 1.020 1.040 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 8% 1.080 1.166 1.260 1.360 1.469 10% 1.100 1.210 1.331 1.464 1.611 6% 1.060 1.124 1.191 1.262 1.338 1.419 1.504 1.594 1.689 1.791 12% 1.120 1.254 1.405 1.574 1.762 14% 1.140 1.300 1.482 1.689 1.925 16% 1.160 1.346 1.561 1.811 2.100 18% 1.180 1.392 1.643 1.939 20% 1.200 1.440 1.728 2.074 2.488 2.288 0.790 0.760 0.731 0.703 0.676 5% 6% 8% 10% 0.952 0.943 0.926 0.909 0.907 0.890 0.857 0.826 0.864 0.840 0.794 0.751 0.823 0.792 0.735 0.683 0.784 | 0.747 | 0.681 | 0.621 0.746 0.705 0.630 0.564 0.711 0.583 0.513 0.677 0.627 0.540 0.467 0.645 0.592 0.500 0.424 0.614 0.558 0.463 0.386 0.585 0.527 0.429 0.350 0.557 0.497 0.397 0.319 0.530 0.469 0.368 0.290 0.505 0.442 0.340 0.263 0.481 0.417 0.315 0.239 0.377 0.312 0.215 0.149 0.295 0.233 0.146 0.092 0.231 0.174 0.099 0.057 0.142 0.097 0.046 0.022 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 Wa I ovo AWN- 1.587 1.714 1.851 1.999 2.159 1.772 1.949 2.144 2.358 2.594 1.974 2.211 2.476 2.773 3.106 2.195 2.502 2.853 3.252 3.707 2.436 2.826 3.278 3.803 4.411 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 2.700 3.185 3.759 4.435 5.234 0.888 0.871 0.853 0.837 0.820 0.804 0.788 0.773 0.758 0.743 0.673 0.610 0.552 0.453 2.986 3.583 4.300 5.160 6.192 0.837 0.813 0.789 0.766 0.744 0.722 0.701 0.681 0.661 0.642 0.554 0.478 0.412 0.307 0.507 0.456 0.452 0.400 0.404 0.351 0.361 0.308 0.322 0.270 0.287 0.237 0.257 0.208 0.229 0.182 0.205 0.160 0.183 0.140 0.104 0.073 0.059 0.038 0.033 0.020 0.0110.005 0.650 0.625 0.601 0.577 0.555 0.456 0.375 0.308 0.208 0.410 0.354 0.305 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.051 0.024 0.012 0.003 0.370 0.335 0.314 0.279 0.266 0.233 0.225 0.194 0.191 0.162 0.162 0.135 0.137 0.112 0.116 0.093 0.099 0.078 0.0840.065 0.037 0.026 0.016 0.010 0.007 0.004 0.001 0.001 1.116 1.127 1.138 1.149 1.161 1.243 1.268 1.294 1.319 1.346 1.384 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 1.898 2.012 2.133 2.261 2.397 2.332 2.518 2.720 2.937 3.172 2.853 3.138 3.452 3.797 4.177 3.479 3.896 4.363 4.887 5.474 4.226 4.818 5.492 6.261 7.138 5.117 5.936 6.886 7.988 9.266 6.176 7.288 8.599 10.147 11.974 7.430 8.916 10.699 12.839 15.407 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 2.653 3.386 4.322 7.040 3.207 4.292 5.743 10.286 4.661 6.848 10.063 21.725 6.727 10.835 17.449 45.259 9.646 17.000 29.960 93.051 13.743 26.462 50.950 188.884 19.461 40.874 85.850 378.721 27.393 62.669 143.371 750.378 38.338 95.396 237.376 1,469.772