7) Consider an annuity of twenty annual cash flows of $1,000 each. Assume a quoted interest rate of 5% compounded annually. a. What interest rate would we discount the cash flows by? What is the present value of the annuity if the first cash flow occurs: b. One year from today? c. Today? d. Five years from today?

8) Consider instead an annuity of twenty cash flows of $1,000 every six months. Assuming a quoted interest rate of 5% that compounds semi-annually: a. Draw a timeline. Make sure you labeled the years and cash flows on your timeline. b. What interest rate would we discount the cash flows by? c. What is the present value of the annuity if the first cash flow occurs One year from today? d. what is the present value of the annuity if the first cash flow occurs today? e. what is the present value of the annuity if the first cash flow occurs five years from today?