3. Suppose you have a real estate investment opportunity that will generate $1,200 per month for the next year. What is the present value of this stream of cash flows if the annual discount rate is 6%?

4.You work for Ford motor company and recently, R&D indicated that that new design of the ford focus allows for GPS in the steering wheel. The cost of putting GPS in the steering wheel is an extra $1.5 billion in manufacturing expenses. However, the Sales Department estimated that this new technology will bring in $700 million in additional revenue each of the next three years. As an alternative, Ford is holding a portfolio of energy stocks that is likely to earn 12% per year over the next three years. If Ford invests in the GPS design, what will the dollar amount of their profit/loss be on the project (assume the discount rate is 12%)?