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. $8,750 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?