1. Kevin was bragging to Tom, a second-year business student. Kevin's mom had given him a new BMW that cost 6,000,000. Tom, who was studying finance, thought hard about the embers and offered Kevin to buy the car from him by paying 400,000 a year forever. The reference rate is 8%. What was the actual purchase price Tom paid for the car?

2. A university student who is starting his studies expects to receive a gift of 1,000,000 from his parents if he completes his studies in 3 years. He gets a loan that is of the nature that he can pay 1,000,000 after these 3 years. How much is that amount based on 8% interest? How long will it take for this amount to double?

3.You have been asked to evaluate an investment option for the GPI pension fund and estimate that it will yield 4,638 at the end of the first year, 6,973 at the end of the second year and 5,000 at the end of the third year. But the investment cost today is 19,000. a. What is the present value of this investment if the required rate of return is 3% b. What is the average return on this investment per year, if no interest rates are assumed? c. What is the future value of the cash flow after three years?