1. John Johnson has an opportunity to receive $300 one year from now. If he can earn 6% on his investments in the normal course of events, what is the most he should pay now for this opportunity?

2. Sailor Sam needs to have $15,000 at the end of 5 years to fulfill his dream of buying a small sailboat. He is willing to invest the funds as a single amount today, but wonders what rate of investment return he will need to earn, depending on how much he has to invest.

a. What is the approximate annual rate of return, compounded annually, needed if Sam can invest $10,200 today?

b. What is the approximate annual rate of return, compounded annually, needed if Sam can invest $8,150 today?

c. What is the approximate annual rate of return, compounded annually, needed if Sam can invest $7,150 today?