1. Using a required rate of return of 14 percent, determine the present value of the following annual cash flows expected to be received over the next five years (assume received on last day of the year):

Cash to be received at the end of year:	1		2		3		4		5
Projected cash flows	$1,000	$1,200		$1,500		$500		$1,000

1a. Using the information from Exercise 1 above, determine the value of a company that is projected to yield the future cash flows listed above in years 1-5, plus a perpetual annual cash flow starting at the end of year 6 of $1,200.

1b.Using the information from Exercise 1a above, determine the value of the company, but now assume that the $1,200 annual cash flow which starts at the end of year 6 grows by 3 percent per year, into perpetuity.