Problem 8 (8 marks) Hugo wants to travel throughout Europe when he graduates from SMU in 4 years' time. He estimates the total cost of the trip to be $10,000. a) How much will Hugo need to invest today to have $10,000 in four years? Assume he can earn the following interest rates over the next four years: (4 marks) First year: 4%, Second year 6%, Third year: 8%, and Fourth year: 10% b) Instead of investing the money today, Hugo has decided to wait two years to invest the money. How much will he need to invest, two years from today, to have $10,000 four years from today? (4 marks) First year: 4%, Second year 6%, Third year: 8%, and Fourth year: 10% Problem 9 (10 marks) Consider the following cash flows. The annual interest rate is 2.5% 0 1 2 3 4 10,000 12,000 5,000 10,000 13,000 a. Calculate the present value of these cash flows (at time 0). (5 marks) b. Calculate the future value of these cash flows (at time 4). (5 marks) Problem 10 (10 marks) Consider the following cash flows and interest rates: 0 1 2 3 4 r = 2.5% r = 1.5% r = 1.9% r = 2.4% 5,000 5,000 5,000 5,000 a. Calculate the present value of these cash flows (at time 0). (5 marks) b. Calculate the future value of these cash flows (at time 4)