1.) Southern Tours is considering acquiring Holiday Vacations. Management believes Holiday Vacations can generate cash flows of $218,000, $224,000, and $235,000 over the next three years, respectively. After that time, they feel the business will be worthless. If the desired rate of return is 13.6 percent, what is the maximum Southern Tours should pay today to acquire Holiday Vacations?

2.) You would like to provide $130,000 a year forever for your heirs. How much money must you deposit today to fund this goal if you can earn a guaranteed 7.6 percent rate of return?

3.) Your insurance agent is trying to sell you an annuity that costs $50,000 today. By buying this annuity, your agent promises that you will receive payments of $260 a month for the next 25 years. What is the rate of return on this investment?