An investment pays you $7,000, $8,000, $9,000 and $10,000 in years 1, 2, 3, and 4. If the current market interest rate is 13.50%, then the maximum amount you should be willing to pay for these cash flows is: $20,874.13 $27,874.13 $24,558.70 $18,532.88 Suppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's college education. Currently, college tuition, books, fees, and other costs an average of $25,000 per year. On average, tuition and other costs have historically increased at a rate of 5% per year. Assuming that college costs continue to increase an average of 5% per year and that all her college savings are invested in an account paying an interest rate of 9%, then the amount of money she will need to have available at age 18 to pay for all four years of her undergraduate education is closest to. (Assume college fees are paid at the start of every year): $240,661.92 $227,735.60 $208,931.74 $229,201.83 A homeowner in Southern California has the opportunity to install a solar water heater in her home for a total cost of $5,000. After installation the water heater will produce a small amount of hot water every day. The solar water heater does not require any maintenance and will last for 15 years. If the market interest rate is 8%, the minimum amount the homeowner must save on water heating costs every year for 15 years for this solar water heater to be a sound investment is: $400 Cannot be determined $427.97 $584.15