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14. A potential tenant makes you a proposition to rent your apartment. He, beginning this month, proposes to pay you $250 every month indefinitely to live in your apartment. Assuming the prevailing interest rate is 5% and that he will live forever, what is the PV of this lease ifyou were to accept his proposal? 15. Assume a home appraiser were to value a home based on rental income only. Assume that a home is indefinitely rentable, without disruption, at a monthly rate of $1500. What is the value of this home when the annual interest rate is 5% and the first payment starts next month? 16. Your new job includes as one of your benefits a free doughnut each morning with a value of $1. If you expect doughnuts to increase in price 500 per year, and prevailing interest rates are 10%, how much do you value this benefit if you expected to live forever and work every day (oh dear!) Note, there are 365 days in a year and you have just finished your breakfast. 17. A stock pays a yearly dividend of $1, expected to grow at 5% per year. If the stock is currently priced at $25, what is the market interest rate? 18. You are tasked with valuing a company based solely on its expected future cash flows. Interest rates are currently 8%. If this company expects income of $500,000 next year (it is the end of year 0 or equivalently the beginning ofthe first year), growing at 6% each year until the end ofthe tenth year. Then, income growth is expected to slow to 1% forever after, what is the value of this company today, in thousands of dollars? 19. What should a 2-year $1000 6% semi-annual coupon bond sell for if the prevailing interest rate is 600? 0. You need a 30-year, $200000 mortgage to purchase a house. At an interest rate of 8%, what will your monthly mortgage payments be