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 per year at the end of each of the next six years
2. $49,650 (lump sum) now
3. $100,450 (lump sum) six years from now
Requirements
1. Calculate the present value of each scenario using a 6% discount rate. Which scenario yields the highest present value? Round to the nearest dollar.
2. Would your preference change if you used a 12% discount rate?