1. What is the present value of $300 received at the beginning of each year for 5 years? Assume that the first payment is not received until the beginning of the third year (thus the last payment is received at the beginning of the 7th year). Use a 10% discount rate and round your answer to the nearest $100.

a) $1,100

b) $1,000

c) $900

d) $1,200

2. Consider the following cash flows:

Date Cash Received Amount of Cash 1/1/87 $100 1/1/88 $100 1/1/89 $500 1/1/90 $100

What is the value on 1/1/85 of the above cash flows? Use an 8% discount rate and round your answer to the nearest $10. a) $600 b) $620 c) $630 d) $650

3. You are planning to deposit $10,000 today into a bank account. Five years from today you expect to withdraw $7,500. If the account pays 5 percent interest per year, how much will remain in the account eight years from today?