3) You need a car and have the option to buy for $25,000 in cash (upfront) OR assume a lease with end of the month payments of $399 for five years. By buying, you will receive an estimated residual value (or scrap value) by selling the car for $2,500 at the end of the 5 years. If interest is 2.7% compounded annually, which financing option would you prefer? (16.1 DCF)

4) You have two investment alternatives. Alternative One requires an immediate cash outlay (payment) of $20,000 today. In return you will receive $3,100 at the end of every quarter for 3 years. Alternative Two requires an immediate cash outlay of $9,000 today and a further $11,000 in 2 years. In return you will receive monthly payments of $1,000 for 3 years. If interest is 8% compounded annually, Find the NPV of each option and determine which is preferred. (16.2 NPV)

5) Sea-Xplore is developing a special vehicle for ocean exploration. The development requires investments of $200,000 today, $300,000 in 2 year from today and $400,000 in 4 years from today. Net returns for the project are expected to be $90,000 at the end of the year over the next 15 years. If the company requires a rate of return of 12% compounded annually, find the NPV of the project.