(Answered) Question -your grandfather would like to share of his

Accounting

Question -

Your grandfather would like to share of his fortune with you. He offers to give you money under one of the following scenarios (you get to choose):

1. $8,000 per year at the end of each of the next six years.

2. $47,450 (lump sum) now

3. $100,450 (lump sum) six years from now

Requirements -

1. Calculate the percent value of each scenario using an 8% discount rate. Which scenario yields the highest present value?

2. Would your preferences change if you used a 12% discount rate?

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