1. ) Draw a cash flow diagram for the following: Your company has a project with a first cost of $15,000, a 10 year life, $5,000 of profit at the end of each year, $2,000 of expense at the end of each year, and a salvage value of $2,000 after 10 years. Draw arrows for all cash flows (when they occur and up or down) that will occur. You can draw arrows (like examples on page 37) or create spreadsheet bar chart (like examples on page 38). Follow the convention listed on page 35.
2. (2 pts) (Note: formula and examples are on page 45 of text) If the nominal annual interest rate is 7.5%, what is the effective interest rate when interest is compounded:
   1. Annually
   2. Semiannually
   3. Monthly
   4. Daily
   5. Continuously (formula on page 48 of text)

Which compounding period would you prefer if you are the lender