Over the next four years, the City of Mythica, New York, is expecting the following cash flows from a federal grant: year 1$150,000; year 2$220,000; year 3$250,000; year 4$175,000. The city wants to use the grant as collateral for a loan, but it is unsure about its net present value. Use Exhibit 26-3 for your solution.

a. What is the net present value of the grant if the rate of return is expected to be 5 percent? b. What is the net present value of the grant if the rate of return is expected to be 8 percent?

(For all requirements, Round your "PV factor" to 3 decimal places.)