1. Assuming the interest rate is 12%, what is the present value of a $1,500 payment you will receive in: a) 2 years? PV factor (12%,2years) = 0.7972 b.) 5 years? PV factor (12%,5years) = 0.5674 c.) 10 years? PV factor (12%,10 years) = 0.3220 2. Melissa Van has estimated that for the next 10 years her business will experience a net annual cash inflow of $60,000. Based solely on the cash flows for the next 10 years, how much is the business worth today? Assume an interest rate of 7%. PV factor (7%,10 years) = 7.0236 3. Your grandmother said she will give you $700 five years from now. How much is the $700 worth today if the discount rate is 5%? 1 PV factor for $1.00 for year 5 a Sat 5% = 0.7835 4. Suppose your grandmother is going to give you $500 for your birthday five years from now. Determine the present value of this amount if: a) The interest rate is 2% PV factor (2%, 5 years) = 0.9057 b.) The interest rate is 6% PV factor (6%, 5 years) - 0.7473 c.) The interest rate is 9% PV factor (9%, 5 years) = 0.6499 Assuming the interest rate is 5%, what is the present value of a $750 payment you will receive in: a) 1 year? PV factor (5%, 1 year) = 0.9524 b.) 3 years? PV factor (5%, 3 years) = 0.8638 c.) 7 years? PV factor (5%, 7 years) = 0.7107 6. Use the information in the table to calculate the present value of the annuity. Annual Payment (5) Discount Rate (%) Number of Years 15,000 12 15 PV Annuity factor (12%, 15 years) = 6.8109 7. You have loaned your brother a sum of money. If he will pay you back $1,000 in three years, how much did you loan him today if the discount rate is 796? PV factor (7%, 3 years) = 0.8163