1. You are offered an asset that costs $600 and generates cash flows of $100 at the end of each year for the next 10 years.

• If the appropriate discount rate for the asset is 8%, should you buy it?
• What is the IRR (internal rate of return) of the asset?

2. You are offered an asset that costs $1,000 and generates cash flows of $50 at the end of each year for the next 30 years.

• If the appropriate discount rate for the asset is 6%, should you buy it?
• What is the IRR (internal rate of return) of the asset?

3. You have just taken out a mortgage of $10,000 over 5 years. Payments at the end of each year are constant (equal every year) at an interest rate of 15%. Calculate the appropriate amortization of the loan by making a table showing the breakdown each year between principal and interest.

4. You have just taken out a mortgage of $30,000 over 15 years. Payments at the end of each year are constant (equal every year) at an interest rate of 15%. Calculate the appropriate amortization of the loan by making a table showing the breakdown each year between principal and interest.

5. You are offered an investment with the following conditions:

The cost of the investment is $1,000.

The investment pays an amount X at the end of the first year; this payment grows at the rate of 10% per year for 11 years.

If your discount rate is 15%, calculate the smallest