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?