You have an opportunity to make an investment that will pay

$300

at the end of the first year,

$400

at the end of the second year,

$500

at the end of the third year,

$400

at the end of the fourth year, and

$400

at the end of the fifth year.a.Find the present value if the interest rate is

13

percent. (Hint: You can simply bring each cash flow back to the present and then add them up. Another way to work this problem is to either use the

=NPV

function in Excel or to use your CF key on a financial

calculatorbut

you'll want to check your calculator's manual before you use this key. Keep in mind that with the

=NPV

function in Excel, there is no initial outlay. That is, all this function does is bring all the future cash flows back to the present. With a financial calculator, you should keep in mind that

CF0

is the initial outlay or cash flow at time 0, and, because there is no cash flow at time 0,

CF0=0.)

b.What would happen to the present value of this stream of cash flows if the interest rate were zero percent?

Question content area bottom

Part 1

a.What is the present value of the investment if the interest rate is

13

percent?

$enter your response here

(Round to the nearest cent.)

Part 2

b.What is the present value of the investment if the interest rate is zero percent?

$enter your response here

(Round to the nearest dollar.)