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Answer question from picture. Need finance formulas for future value / discount rate etc. Must provide formula/work. There is NO ADDITIONAL GRAPH, CODE, LINK or

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Answer question from picture. Need finance formulas for future value / discount rate etc. Must provide formula/work.

There is NO ADDITIONAL GRAPH, CODE, LINK or anything. It is literally a finance question with a. and b. Please do not be like some tutors on this website that spam "missing material". I did this question myself but I just want to double check my answer before submitting, so if I can do it then the tutors can do it too right?

Thank you!

image text in transcribed
Problem 4: In your spare time, you start looking at some investment advertisements online. a) The first one that intrigues you says, "Pay us $90 a year for 9 years (first payment 1 year from today), and we will pay you $90 a year thereafter in perpetuity (starting in year 10)." Is there any discount rate for these cash flows that makes this a good deal? If NO, explain why. If YES, say whether the discount rate must be GREATER THAN or LESS THAN what rate? (You can round the rate to the nearest percent). (3 points) b) The second one that intrigues you says the following, "Give us $1000 today and in 5 years we will give you Stock Z's share price times 20." (for example, if Stock Z is trading at $60 in 5 years, you would receive $60 x 20 = $1200). Stock Z has a current price of $45 a share. Is there any discount rate (i.e. expected return) for Stock Z that makes this a good deal? If NO, explain why. If YES, say whether the discount rate must be GREATER THAN or LESS THAN what rate? (You can round the rate to the nearest percent). (3 points)

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