1. Suppose you have the opportunity to make an investment in a real estate venture that expects to pay investors $900 at the end of each month for the next eight years. You believe that a reasonable return on your investment should be an annual rate of 15 percent compounded monthly. Required: a. How much should you pay for the investment? b. What will be the total sum of cash you will receive over the next eight years? c. What do we call the difference between the present value and total cash received?

2. An investor is considering an investment that will pay $2,350 at the end of each year for the next 10 years. He expects to earn a return of 12 percent on his investment, compounded annually. Required: a. How much should he pay today for the investment? b. How much should he pay if the investment returns are received at the beginning of each year?