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. $8,750 a year at the end of each of the next seven years.
2. $50,050 (lump sum) now.
3. $100,250 (lump sum) seven years from now.
Requirement
1. Calculate the present value of each scenario using a 6% discount rate. Which scenario yields the highest present value? Would your preference change if you used a 12% discount rate?