1. a. Back when I was in college, interest rates were a lot higher than they are today. It was possible to find a savings account that returned 6.5% per year. If compounded monthly, what would be the Equivalent Annual Rate for this account? (Report as a decimal with 4 digits of accuracy).

b. You assume that books for the next four years will cost $579 in one year, $553 in two years, $817 in three years, and $357 in four years when you really don't care anymore. At a discount rate of 5%, what is the present value of all four cash flows combined?