1. You expect to receive annual payments of $1,000 for four years beginning one year from today. You can earn an annual return of 2%, compounded annually, on money invested today.

What is the present value of these payments today?

2. You expect to receive annual payments of $1,000 for four years beginning one year from today. You can earn an annual return of 2%, compounded annually, on money invested today.

What is the present value of these payments today if the first payment comes four years from today instead of today

3. You are considering buying land near Palm Beach, Florida. Once bought, you could divide the land into two lots. You estimate could sell one lot two years from now for $550,000 and the other lot 4 years from now for $750,000. You can earn an annual return of 12%, compounded annually, on money invested today in other real estate ventures.

What is the most you should pay for the land today?