1)DCF and determine which option is better (a or b) for financing the same car, given rates are 6% compounded annually: (Chapter 16.1)

a/ Paying $35,000 today and receive (so subtract from cost) $8,500 in 6 years as a used car resale.

b/ Pay monthly payments (at the beginning of the month) of $499.00 for six years.

2)Southern Pole is developing a special vehicle for Antarctic exploration. The development requires investments of $100,000 today, $200,000 in 1 year from today and $300,000 in 2 years from today. Net returns for the project are expected to be $90,000 at the end of year over the next 15 years. If the company requires a rate of return of 12% compounded annually-find the NPV. (Chapter 16.2)