I ←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. $7,550 a year at the end of each of the next eight years2. $49,650 (lump sum) now3. $98,150 (lump sum) eight years from nowCalculate 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 a12% interest rate?(Click 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)CHOUsing an 8% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar)Present value of Scenario 1

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$49,650 (lump sum) now $98,150 (lump sum) eight years from now

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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←
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. $7,550 a year at the end of each of the next eight years
2. $49,650 (lump sum) now
3. $98,150 (lump sum) eight 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?
(Click 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)
CHO
Using an 8% interest rate, calculate the present values for each scenario. (Round the amounts to the nearest dollar)
Present value of Scenario 1

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