Part I 1. Mr. Smith just passed away and left his son the following estate: $75,000 per years for ten consecutive years, the first cash flow starts today. If annual interest rate is 4.8%, what is the today's value of the estate? (3 points) 2. Timmy's investment portfolio worth $1,200,000 today. She wants to spend $92,000 per year as an ordinary annuity starting from next year. If Timmy's portfolio generates 5.2% returns annually, how long will her portfolio last? (3 points) 3. Find the present value of the following cash flows assuming interest rate is 8.26% (3 points) Today Year 1 Year 2 Year 3 Year 4 Year 5 Cash flow 0 -$900 $1,400 -$1,000 $2,300 $1,510 4. Mr. Jones started a scholarship fund for minority students. His goal is to provide the university with $180,000 of financial support each year forever. If the rate of interest is 6.375%, how much money will Mr. Jones have to give the university today to provide the desired level of support? (3 points) 5. You've been house shopping and aren't sure how big a house you can afford. You figure you can handle monthly mortgage payments of $1,560 and you can get a 30-year loan at 4.28%. How big of a mortgage can you afford? (3 points) 6. Home Depot put up an advertisement For only four end-of-the year payments of $5,800, you can renovate your kitchen now." If you can borrow money a 3.75% to finance the project, what is the price of kitchen renovation project today? If you are to make the payment at the beginning of the year, what is the price of the renovation project today? (4 points)