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4. [8 Points] A real estate developer identified a project that generates the following cash flows: Year 1: $850 million; Year 2: $570 million; Year

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4. [8 Points] A real estate developer identified a project that generates the following cash flows: Year 1: $850 million; Year 2: $570 million; Year 3: $270 million. Suppose the discount rate is 20%. (a) What is the present value of these cash flows? (b) What is the future value of these cash flows in Year 3? 5. [4 Points] Your mortgage lender states that it charges a 18% annual percentage rate (APR), and you have to make monthly payments, which leads to monthly compound- ing. What is the effective annual rate (EAR)

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