1. A project pays the investor $5 att1andt2. Fromt3on, the cash flow will increase by5%. For example, the cash flow att3is $5.25, and the cash flow att4is $5.5125. The rate of return is 15%. Please calculate the projects present value.

2. One project has three cash flows: att0, the initial investment cost is $150; att1, the project pays $121; att2, the project needs an extra investment $242; att3, the project pays $665.5. The project has a constant spot rate of return 10%. What is the present value of the project?

3. A tall Starbucks coffee costs $1.65 a day. If the banks daily interest rate is 0.01%,compounded daily, and if the Starbucks price never changed, what would an endless, inheritable free subscription to one Starbucks coffee per day be worth today? [Hint: if you subscribe today, you can get your first coffee tomorrow.]