PLEASE SHOW WORK USING THE FORMULAS BELOW: 1- You love travelling and have decided to join the 7 continent travel club. Over the course of the next 7 years, you will go on a guided tour on each of the seven continents. The cost for the trip the first year is $12,000 and is payable today. After that, the trip costs will increase 3% per year for the 6 remaining years The club gives three options for payment. Assuming a 5% interest rate, which option would you choose? A) Seven (7) annual payments beginning with the $12,000 payment today. The payments will increase 3% per year B) One payment of $78,000 today and no additional payments for the remaining 7 years C) One payment of $108,500 7 years from today 2- You plan to take a year off to hike the Appalachian Trail. You believe that it will cost $4,500 to buy gear and food for the trip. You have $4,000 in your savings account and the bank pays an interest rate of 4% APR compounded quarterly. you have enough money for your trip? A) Less than one year B) Between 1 and 2 years C) Between 2 and 3 years D) Between 3 and 4 years 3- You receive $8,000 every six months beginning six months from today for 10 years and an additional $2,500 10 years from today. If the interest rate is 3.0% (EAR), which of the following is closest to the present value (PV) of this stream of cash flows? A) $137,499 B) $139,360 C) $144,148 D) $146,191 FORMULAS ry, = C(1 + r)n Future Value of a Cash Flow Present Value of Future Cash Flow Present Value of a Perpetuity Present Value of an Annuity Cash Flow in an Annuity PV r( 1-(1+r)n Present Value of a Growing Perpetuity 1+g 1+r Present Value of a Growing Annuity r-g APRYm Converting APR to EAR (APY) m = # compounding periods