Practical Applications of Cash Flow and Discounted Cash Flow Analysis

a) Write a problem that illustrates a situation that requires you to calculate the present value of an annuity that you have just inherited. Write the situation as a problem, then solve for the result, showing work.

b) Write a problem that illustrates a personal investment situation with cash flows over a 4 year period. List the time periods and the expected cash flows for that problem What is the cash value of your problem at a discount rate of 0%? What is the cash value of your problem at a discount rate of 5%? Which do you believe is the most reflective of the current economic climate of the US this year? Explain?