Mitchell Investments has offered you the following investment opportunity:

■ $6,000 at the end of each year for the first 5 years, plus

■ $3,000 at the end of each year from years 6 through 10, plus

■ $2,000 at the end of each year from years 11 through 20.

a. How much would you be willing to pay for this investment if you required a 12 percent rate of return?

b. If the payments were received at the beginning of each year, what would you be willing to pay for this investment? L026