2 question

XYZ Company is selling a building. The buyer has offered to pay $50,000 now and then $20,000 per year for 5 years starting 3 years from now. (At the end of year 3) a) If XYZ's required rate of return is 8 percent, what is the present value of this series of payments? b) A second buyer has offered XYZ $120,000 for the building (to be paid one year from now). Which offer should XYZ accept? (Assume XYZ's rate of return is still 8%.) Mel Magee is researching some investments that will pay annual amounts for an indefinite period of time. The purchase prices are based on their present values and he would like to see if any are within his investment budget of $75,000. Here are the investments that he has found: Investment Annual Payment A B D $20,000 100,000 3,000 60,000 Appropriate Risk- Based Discount Rate 8% 10% 6% 5% Applicable Growth Rate N/A N/A 0.5% 1% For each investment above, calculate the present value. Are any within Mel's investment budget