a. Calculating Rates of Return. Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, Sotheby's sold the Edgar Degas bronze sculpture Petite danseuse de quartorze ans at auction for a price of $10,311,500. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12,377,500. What was his annual rate of return on this sculpture?

b. Present Value and Multiple Cash Flows. Investment X offers to pay you $4,400 per year for 9 years, whereas Investment Y offers to pay you $6,100 per year for 5 years. Which of these cash flow streams has the higher present value if the discount rate is 6 percent? If the discount rate is 22 percent?