Your grandmother would like to share some of her fortune with you. She offers to give you
Question:
1. $7,000 a year at the end of each of the next eight years
2. $45,000 (lump sum) now
3. $75,000 (lump sum) eight 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?
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