Answer all questions and show your work:

1. What is the value of a financial instrument that provides constant income for 40 years of $1,500 per year? Assume a 5% discount rate.

2. What is the value of a financial instrument that provides constant income for 40 years of $4,000 per year and has costs that are $2,500 per year? Assume a 5% discount rate.

3. What is the value of a financial instrument that provides constant income forever of $1,500 per year? Assume a 5% discount rate.

4. What is the value of a financial instrument that provides constant income for 15 years of $1,500 per year? Assume a 5% discount rate.

5. What is the value of a financial instrument that provides constant income for 15 years of $1,500 per year? Assume a 15% discount rate.

6. Explain how present value differs from net present value.

7. Explain how net present value differs from an annuity.

8. Explain how net present value differs from a perpetuity.

9. Explain how a present value differs from an annuity.