$1.$ Your firm anticipates the following cash flows:

a$.$ With discount rate of $16\%,$ what is the value of this firm?

Today

$75,000$

Year$1$

$125,000$

Year$2$

$125,000$

Year$3$

$125,000$

Year$4$

$125,000$

b$.$ A proposed project costs $$15,000$ today and will increase CFs by $20,000$ for each of the

next $4$ years. Should your firm accept this project...why?