Consider a project with the following cash flows:

Year 0: Cash flow = $500

Year 1: Cash flow = $0

Year 2: Cash flow = -$500

If the current market rate of interest is 8% per year, compounded annually, what is the value of this stream of cash flows expressed in terms of dollars at year 1? (Note: This does not ask for the value as of year 0, but rather, as of year 1.)

a. $0

b. $250

c. $133

d. $77

An annuity pays $12 per year for 100 years, with the first payment occurring in one year. What is the present value (P) of this annuity given that the discount rate is 8%?

1. $146.63
2. $151.45
3. $149.93
4. $144.62