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1) Smooth Shaved Ice Co. has identified an investment project with the following cash flows: What is the present value of these cash flows (in total) if the discount rate is 6 percent? 2) Investment X offers to pay you $4,000 per year for 10 years, whereas Investment Y offers to pay you $8,000 per year for 4 years. What is the present value of each investment if the discount rate is 5 percent? 3) Betty Bucks has identified an investment proiect with the following cash flows: What is the future value of these cash flows (in total) if the interest rate is 6 percent? 4) An investment offers $12,000 per year for 25 years. If the required return is 8 percent, what is the value of the investment? 5) What would the value of the investment from Question 4 be if the payments occurred forever? 6) Broke Bank offers you a $66,000, six-year term loan at 11.5 percent annual interest. What will your annual loan payment be? 7) Long Life Insurance Co. is trying to sell you an investment policy that will pay you and your beirs $44,400 per year forever. If the required return on this investment is 13 percent, how much will you pay for the policy? 8) What is the present value of $55,000 to be received in 15 years if the discount rate is: a) 8% compounded quarterly? b) 8% compounded monthly? 9) What is the future value of $55,000 invested today in 15 years if the required rate of return is: a) 8% compounded quarterly? b) 8% compounded monthly

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