Answer the following questions 1. What will a 100 inves tment be worth in three years' time if the rate of interest is 8 per cent, using: (a) simple interest? (b) annual compound interest? 2. Compute the present value of a 100 cash flow for the following combinations of discount rates and times (a) r 10 percent, t 10 years (b) r 10 percent, t 20 years (c) r 5 percent, t10 years (d) r 5 percent, t -20 years 3. Find the interest rate implied by the following combinations of present and future values Present Value Years Future Valuc 400 684 300249 300 183 4. Annuity Values (a) What is the present value of a 3 year annuity of 100 if the discount rate is 6% ? (b) What is the present value of the annuity in (a) if you have to wait 2 years instead of 1 year for the payment stream to start ? 5. Professor's Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of 80,000 at age 65, the firm will pay the retiring professor 600 a month until death. (a) If the professor's remaining life expectancy is 20 years, what is the mouthly rate on this annuity? What is the effective annual rate? (b) If the monthly interest rate is 0.5% , what monthly annuity payment can the firm offer to the retiring professor? government 4 pcercent perpetuitics pay 4 interest cach year forever. Another bond, 2) percent perpetuities, pays 2.50 a year forever