Please provide solutions step by step, without EXCEL and a financial calculator.

1.

Your employer has agreed to make 80 quarterly payments of $800 each into a trust account to fund your early retirement. The first payment will be made by the employer 3 months from now. At the end of 20 years (80 payments), the retirement fund will be used to pay you 10 equal annual payments, with the first payment to be made at the beginning of Year 21 (or the end of Year 20). The funds will be invested at a nominal rate of 8 percent APR, quarterly compounding, during both the accumulation and the distribution periods. How large will each of your 10 receipts be?

2. You are considering two mutually exclusive projects with the following cash flows. Will your choice between the two projects differ if the required rate of return is 8% rather than 11%? If so, what should you do?

A. yes; Select A at 8% and B at 11%.

B. yes; Select B at 8% and A at 11%.

C. yes; Select A at 8% and select neither at 11%.

D. no; Regardless of the required rate, project A always has the higher NPV.

E. no; Regardless of the required rate, project B always has the higher NPV.

3.

Martin Fillmore is a big football star who has been offered contracts by two different teams. The payments (in millions of dollars) he receives under the two contracts are listed below:

Team A Team B

Year Cash Flow Cash Flow

0 $8.0 $3

1 4.0 4.0

2 4.0 4.0

3 4.0 8.0

4 4.0 8.0

Fillmore is committed to accepting the contract that provides him with the highest net present value (NPV). At what discount rate would he be indifferent between the two contracts?

4.

Project A has the following cash flows:

Project A

Year Cash Flow

0 -$100

1 40

2 40

3 40

4 140

If the cash flows from year 1, 2, and 3 can be reinvested at a rate of return of 10%. What is the realized compounded rate of return over the period of 4 years of this project? Is this realized rate of return higher or lower than IRR?