1. In 2006 Michael purchased a piece of land for $15,000. Today in 2020 the same land is worth $47,500. What is the average rate of return Michael has earned from his investment?

a. 9.3%

b. 8.6%

c. 10.1%

d. 9.9%

2. Your brother gave you the best birthday gift ever. He purchased for you a perpetuity which makes $2500 annual payments. If the current interest rate in the market is 6%, how much did your brother spend on your gift?

a. 42,120

b. 41,667

c. 43,667

d. 40,560