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. $7,750 a year at the end of each of the next seven years 2. $50,250 (ump sum) now 3. $100,250 (ump sum) seven years from now Calculate the present value of each scenario using an 8 % interest rate. Which scenario yields the highest present value? Would your preference change if you used a 12% interest rate? (Cick the icon to view the present value annuity factor table.) (Click the icon to view the future value annuity factor table.) (Click the icon to view the present value factor table.) Click the icon to view the future value factor table) Using an 8% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar ) Present value Scenario 1 X Present Value of Annuity of $1 Present Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% 0.980 0.971 0.877 0.990 0.833 0.962 1.886 0.952 0.943 0.926 0.893 0.862 0.847 1 0.909 1.736 2 1.970 1.942 1.913 1.859 1.833 1.783 2.577 3.312 1.690 1.647 1.605 1.566 1.528 2.723 3.546 2.829 2.402 2.106 2.941 3.902 2.884 3.808 2.775 3.630 2.673 3.465 2.487 3.170 2.322 2.914 2.246 2.798 2.174 2.690 3.717 3.037 2.589 3.605 5 4.853 4.713 4.580 4.452 4.329 4.212 3.993 3.791 3.433 3.274 3.127 2.991 6 5.795 6.728 5.601 5.417 6.230 5.242 5.076 4.917 5.582 4.623 4.355 4.111 3.889 3.685 4.039 3.498 3.326 4.868 5.335 5.759 6.472 6.002 5.786 5.206 4.564 4.288 3.812 3.605 7 8 7.652 7.325 7.020 6.733 6.463 6.210 5.747 6.247 4.968 4.639 4.344 4.078 4.303 3.837 8.566 8.162 7.786 7.435 7.108 7.722 6.802 5.328 4.946 4.607 4.031 4.192 10 9.471 8.983 8.530 8.111 7.360 6.710 6.145 5.650 5.216 4.833 4.494 4.656 11 10.368 9.787 9.253 8.306 8.863 9.394 9.899 11.118 10.380 8.760 9.385 7.887 8.384 7.139 7.536 7.904 6.495 6.814 5.938 6.194 5.453 5.660 5.029 5.197 4.327 4.439 11.255 10.575 12 9.954 4.793 12.134 11.348 10.635 13 9.986 8.853 7.103 6.424 5.842 4.910 5.008 5.575 5.092 4.675 5.342 4.533 13.004 12.106 11.296 10.563 6.628 5.468 14 9.295 9.712 8.244 8.559 7.367 6.002 6.142 4.611 13.865 12.849 11.938 7.606 6.811 15 18.046 16.351 14.877 13.590 12.462 11.470 6.623 5.353 4870 20 9.818 8.514 7.469 7.843 8.055 5.929 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 25 6.873 7.003 6.097 6.177 5.467 4.948 4,979 25.808 22.396 19.600 17.292 15.372 13.765 11.258 30 9.427 5.517 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 5.548 40 8.244 7.105 6.233 4.997 Print Done Future Value of Annuity of $1 Future Value of Annuity of $1 5 % 1.000 Periods 1% 2% 3% 4% 6% 8% 10% 12% 14% 1.000 2140 3440 16% 18% 20% 1.000 2.200 1.000 1.000 1 1.000 2.010 3.030 4.060 5.101 1.000 2.030 3.091 1.000 2.040 1.000 1.000 2.080 3.246 1.000 2.100 1.000 2.120 1.000 2.180 3.572 5.215 2.060 2 2.020 2050 2.160 3.506 3 3060 3.122 3.153 3.184 3.310 3.374 3.640 4.122 5204 4.641 4 4.184 4.246 4310 4.375 4.506 4.779 4.921 5.066 5.368 5.309 5 5.416 5.526 5.637 5.867 6.105 6.353 6610 6.877 7.154 7.442 6.152 7.214 8.286 9.369 10.462 6.308 7.434 8.583 9.755 10.950 6.633 7.898 9.214 10.583 12.006 6.802 8.142 9.549 11.027 12.578 8.115 10.089 12.300 14.776 17.549 8.536 10.730 13.233 16.085 19.337 9.442 6 6.468 6.975 7.336 7.716 8.977 9.930 12.916 16.499 20.799 25.959 7.662 8.892 10.159 11464 8.394 9.897 8.923 10.637 12.488 14.487 9.487 11436 13.579 15.937 7 11.414 12.142 8 14.240 17.519 21.321 15.327 19.086 23.521 11.491 10 13.181 12.169 11 12 13 11.567 12.683 13.809 14.947 16.097 12.808 14.192 13.486 15.026 16.627 18.292 20.024 14.207 15.917 17.713 19.599 21.579 14.972 16.870 16.645 18.977 21.495 24.215 27.152 18.531 21.384 24.523 20.655 24.133 28.029 32.393 37.280 23.045 27.271 32.089 37.581 25.733 30.850 36.786 43.672 28.755 34.931 42219 32.150 39.581 48.497 59.198 72.035 13.412 14.680 15.618 17.086 18.882 21.015 23.276 14 15.974 27.975 50.818 17.293 31.772 60.965 15 18.599 43.842 51.660 22.019 28.243 34.785 186.688 20 24.297 26.870 36.459 29.778 33.066 36.786 45.762 57.275 72.052 91.025 181.871 115.380 146.628 133 334 241.333 767.091 342.603 790.948 1,342.025 2.360.757 4,163.213 7,343.858 54.865 79.058 154.762 73.106 249.214 530.312 25 32.030 41.646 56.085 95.026 47.727 98.347 471.981 30 40 40.568 60.402 164.494 442.593 47.575 66.439 113.283 356.787 1,181.882 75.401 120.800 259.057 48.886 Print Done Future Value of $1 Future Value of $1 12% 20% 10% 16% 18% 4% 8 % 1.080 1.166 1260 1.360 1.469 Periods 1% 1.010 1.020 1,030 2% 1.020 1.040 1.061 1.082 1.104 3% 1.030 1.061 1.093 1.126 1.159 5% 1,050 1.103 1.158 1216 1276 6% 14% 1.040 1.060 1.100 1.120 1.140 1.160 1.180 1.200 1440 1.728 2.074 2.488 2 1.082 1.125 1.170 1.217 1.124 1.191 1.262 1.338 1210 1.331 1464 1611 1254 1405 1.574 1.762 1.300 1.482 1.689 1.925 1.346 1.561 1.811 2.100 1.392 1.643 1.939 2.288 3 1.04 1.051 4 5 1.062 1.072 1.083 1.094 1.105 1.126 1.149 1.172 1.195 1219 1.419 1.504 1.594 1.689 1.791 1.587 1.714 1.851 1.999 2.159 2.195 2.502 2.853 3.252 3.707 2.436 2.826 3278 3.803 4.411 2.700 3.185 3.759 4.435 5.234 2.986 3.583 4.300 5.160 6.192 6 1.194 1.265 1.340 1.772 1.974 1.230 1.267 1.305 1.344 1.316 1.369 1.423 1480 1.407 1477 1.551 1.629 1.949 2.144 2.358 2.594 2.211 2476 2773 3.106 4.226 1.116 1.127 1.138 1.149 1.161 1.243 1268 1.294 1.319 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 1.898 2012 2.133 2.261 2.397 2.332 2518 2720 2.937 3.172 2.853 3.138 3.452 3.797 4.177 3479 3.896 4.363 5.117 5.936 6.886 7.988 6.176 7.288 8.599 7430 8.916 10.699 12.839 15.407 4.818 5.492 6.261 7.138 1.980 2079 4.887 5474 10.147 11.974 1.346 9266 20 25 1.220 1282 1.348 1.489 1.486 1.641 1811 2.208 1.806 2004 2.191 2.666 3.243 4.801 2653 3.386 4.322 7.040 3.207 4.202 5.743 10.286 4.661 6.848 6.727 10.835 9.646 17.000 13.743 26.462 19461 40.874 27.393 62.669 38.338 95.396 237.376 1,469.772 30 2.427 10.063 17.449 29.960 50.950 85.850 143.371 3262 45.259 93.051 188.884 750.378 40 21.725 378.721 Print Done