1.) You decided to make monthly deposits into your savings account to have $5,000 by next August, which is 7 full months away, for your trip to the South Pacific. In total, you expect to make 8 deposits, with the first deposit today. How much do you need to put aside each month, assuming that your savings account earns monthly interest rate at the rate of 6% per year?

3.) A firm has identified several investment opportunities, with respective cash flows provided in a table below. The projects are not mutually exclusive and each of these projects is infinitely divisible (i.e., the firm can invest into a fraction of the project, receiving corresponding fractional gain). The company has only $500 in its cash account to invest, and it uses a 10% discount rate.

Project A: Year 0 Year 1 Year 2

-220 160 120

Project B: -210 190 210

Project C: -160 110 115

Project D: -250 180 180

a.) Which of these projects should the firm undertake?

b.) What is the total value that is created?

Now assume that the projects are indivisible.

c.) Which of these projects should the firm undertake?

d.) Which is the total value that is created?