1.Typically, the calculation of present and future values assumes that all cash flows occur _____.

a.in the middle of a period

b.evenly spaced throughout a period

c.at the beginning of a period

d.at the end of a period

2.You win the Publishers Clearing House Sweepstakes. You can choose between getting a lump sum of $6,999,582 now or getting $1,000,000 every year for 10 years, starting one year from now. If you take the money now and invest it, you'll expect to earn an annual return of 7%.

What is the present value of the 10 yearly payments?

3.A security pays $800 every 8 years forever. The appropriate discount rate is 9% (EAR).

What is the value of the security if the first payment occurs 2 years from now?