1. Present Value and Multiple Cash FlowsFox Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? At 24 percent?Page 155

Year Cash Flow

1 $ 570

2 430

3 840

4 1,230

3.Future Value and Multiple Cash FlowsWells, Inc., has identified an investment project with the following cash flows. If the discount rate is 8 percent, what is the future value of these cash flows in Year 4? What is the future value at an interest rate of 11 percent? At 24 percent?

Year Cash Flow

1 $ 865

2 1,040

3 1,290

4 1,385

10.Calculating Perpetuity ValuesLarrys Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $25,000 per year forever. If the required return on this investment is 4 percent, how much will you pay for the policy?

12. Calculating EARFind the EAR in each of the following cases.

Table Summary: Column 3, Effective Rate column, is blank.

Stated Rate (APR) Number of Times Compounded Effective Rate (EAR)

10.2%. Quarterly

18.0 Monthly

13.5 Daily

9.5 Semiannually