PART 1:

The present value of an ordinary annuity is $13,000. What would be the present value of this annuity if the payments were to be received at the beginning of each period? Assume the interest rate is 18%.

A. $16,500 B. $13,636 C. $15,340 D. Insufficient information to determine we need to know the specific cash flows and the timing

PART 2:

If you were offered a stream of cash flows of $1500 per year forever and the appropriate interest rate for an investment of this risk level was 6.8%, what is the most that you should be willing to pay for this deal?

A. Approx. $22,059 B. Approx. $18, 667 C. Approx. $8,333 D. It has infinite value because it is an infinite stream of cash flows