Suppose you are an investment analyst at a major financial firm

$.$A client is considering two investment opportunities:

Project A and Project B$.$

Project A promises a series of cash flows of $10,000$ per year for the next five years. Project B

offers a lump$-$sum payment of $45,000$ at the end of five years.

a$)$

Choose a suitable discount rate and calculate the present value of both Project A

and Project B$.$ Show your calculations.

b$)$ Given your calculations and understanding of present value,

provide a recommendation to the client on which project they should choose. Consider

factors such as risk or liquidity.

c$)$Briefly discuss two limitations and assumptions inherent in using present value as

a decision$-$making tool.