1 Catherine considers an investment plan that will pay $5,520 at the end of each of the next 3 years. This opportunity requires an initial investment of $1,380 plus an additional investment at the end of the second year of $6,900. Use the information given to answer the following questions. (1) Draw the time line showing the cash flows of Catherine's investment plan. (2) Based on 3-year's cash flows, please calculate the Present Value of Cash Inflows. Suppose the interest rate is 2.1% per year. (3) What is the Present Value of Cash Outflows for her 3-year's plan (including the initial investment)? Suppose the interest rate is 2.1% per year. (4) Should Catherine take this plan? Compare the results you calculated from questions (2) and (3).

2) Suppose you are thinking of whether to invest in a project, which requires an investment of $9.7 million today and $4.7 million in one year. You will receive $21.7 million in one year. The interest rate is 10.1%. Use the given information to answer the following answers. (1) Draw the time line showing the cash flows. (2) Calculate the Present Value of Cash Inflows for this project. (3) Calculate the Present Value of Cash Outflows for this project (including the initial investment). (4) What is your investment decision? Compare the present value of your total investment and the present value of your expected cash inflow.