1. You are offered three annuities (these make equal payments over a specific period). Using an annual 5.5% discount rate, calculate each annuity's price: # Price ($) Payments ($/month) Life (yrs.) 1 ? 195 6 2 ? 200 (growing @1%/yr.) 5 3 ? 135 (growing @2.5%/yr.) Forever 2. You purchase a new machine for your firm. It costs $84,000 and will expand your cash flow by $13,500/year in year 1 growing by 2.5% per year after that. The system will work for 30 years before you have to replace it. What are the NPV (at a 5.5% discount rate) and IRR? The vendor offers you another machine costing $99,000 and lasting 35 years, with the same yearly cash flow and growth rate. What are the NPV and the IRR for it? Should you get it?