7. present value Ralph is practicing present value mechanics. For this purpose, the following cash inflows are assumed. Each cash inflow occurs at the end of the indicated year.Whatever interest rate is present is constant throughout the horizon.

(a) Compute the present value, as of the start of the first year, assuming a discount rate of r = 12% per year.

(b) Repeat the above exercise for discount rates of 8%, 10%, 14%, and 16%.

(c) Now assume a discount rate of 11%. Compute the present value, as of the start of year t of the remaining cash flows. Do this for t = 1, 2, ..., 7. For example, the present value at the start of year t = 6 will be 6, 200(1.11)−1 + 125(1.11)−2.

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end of year dollar amount 1234569 1,200 6.750 8.690 5,000 7,500 6.200 125