1.What is the present value of an annual cash flow that consists of 5 annual cash flows of 1,000 each (years 1 through 5) and then a perpetual annual cash flow starting in year 6 with 1,500, growing each year after that by 1%? The discount rate is 10% per year.

2.The table below sets out data on an investment project:

Annual cash flow	2.5m
Investment cost	15m
Duration	Ten years
Beta	1.4
Risk-free rate	3%
The average return on the market index	7%

What is the net present value of the project? Should the project be accepted?