1. Buena Vista Co. has identified an investment project with the following cash flows. If the discount rate is 10%, what is the present value of these cash flows? What is the present value at 18%? At 24%?

Year

1 2 3 4

Cash Flow

$720

930

1,190

1,275

2 An investment offers $6,100 per year for 15 years, with the first payment occurring one year from now. If the required return is 6%, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever?

3 One of your customers is delinquent on his accounts payable balance. You've mutually agreed to a repayment schedule of $500 per month. You will charge 1.7% per month interest on the overdue balance. If the current balance is $16,000, how long will it take for the account to be paid off?

4 If the appropriate discount rate for the following cash flows is 7.38% per year, what is the present value of the cash flows?Year 1 2 3 4Cash Flow $2,48003,920 2,170