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1.An investor will receive a 15-year annuity of $2,750 per year. If the annual interest rate is 4.5%, what is the present value of this

1.An investor will receive a 15-year annuity of $2,750 per year. If the annual interest rate is 4.5%, what is the present value of this annuity?

2.Your friend wants to borrow $5,500 from you and gives you three options for repayment. Assuming a discount rate of 4.5%, which of the following options should you choose?

Option A: $1,600 a year for the next 4 years

Option B: $7,000 lump sum paid 3 years from now

Option C: $750 a year for the next 12 years

a You should not lend the money because all options are negative NPV investments
b Option C because it is the highest net present value
c Option A because it is the highest net present value
d You are indifferent because they all have the same net present value
e Option B because it is the highest net present value

3.Ross will inherit a lump sum amount of $750,000 that is payable in 7 years. The current rate of return is 6%. What is the present value of the lump sum?

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