Question 1 : Calculation Present Value: (see page 161 - Example 6.3 as reference)

You are offered an investment that will pay you $500 in a one year, $600 the next year, $700 the next other year and $900 at the end of the fourth year, You can earn 8% on every similar investments. What is the most you should pay for this year?

Question 2 : Calculation Annuity PV factor: (see page 165 - Example 6.5 as reference

After carefully going over your financial budget, you have determined you can afford to pay $1,500 per month toward a new car. You call your local bank and find out that the going rate is 1.05% per month for 60 month. How much can you borrow?