11. An asset promises to pay $1,000 in each of the next two years.

a) What is its present value assuming the one-year rate of discount is 1.5% and the two-year is 2.2%?

b) What is its present value assuming both discount rates are 1.85%?

12. An asset promises to pay $60 in each of the next three years. Assume the rate of discount is 5% for each of the years.

a) Calculate its price the long way; by discounting each future cash flow and summing. b) Calculate its price using the annuity formula.