Consider the following random cash flow stream (C1,C2, ..., Cn, ...). The n-th 1 year payment Cn = n2 1 is received with probability Pr 1, 2, .... For simplicity, we assume that the prevailing rate r > 0. n = 4n' ~ 1 1. Compute the mean discounted payment, i.e., M = CnPn This (1+r)ni n=1 quantity is also known as the the Expected Present Value. 2. Compute the variance o2 of the discounted payments. Consider the following random cash flow stream (C1,C2, ..., Cn, ...). The n-th 1 year payment Cn = n2 1 is received with probability Pr 1, 2, .... For simplicity, we assume that the prevailing rate r > 0. n = 4n' ~ 1 1. Compute the mean discounted payment, i.e., M = CnPn This (1+r)ni n=1 quantity is also known as the the Expected Present Value. 2. Compute the variance o2 of the discounted payments