1. A prestigious investment bank designed a new security that pays a quarterly dividend of $5.40, in perpetuity. The first dividend occurs one quarter from today. Whats the price of the security if the APR is 10,1% compounded quarterly?

2. What is the present value of an annuity of $6,000 per year, with the first cash flow received three years from today and the last one received 25 years from today? Use a discount rate of 7 percent.

3. Southern California Publishing Company is trying to decide whether to revise its popular textbook, Financial Psychoanalysis Made Simple. The company has estimated that the revision will cost $90,000. Cash flows from increased sales will be $20,800 the first year. These cash flows will increase by 4 percent per year. The book will go out of print five years from now. Assume that the initial cost is paid now and revenues are received at the end of each year. If the company requires a return of 10%, calculate the present value of inflows of the project.