For each of the following situations, do the calculations necessary to make a decision:

a. A company sells land and a building for $22 million. The buyer agrees to pay $5 million cash when title to the property transfers, $3 million at the end of each of the next four years and $5 million at the end of the fifth year. The buyer and seller agree the financing provided by the seller will be interest-free. At a discount rate of 14 percent, what is the selling price if the time value of money is considered?

b. Today is January 1, 2014. An investor deposits $1,000 in a savings account that guarantees 5 percent interest per year compounded annually. She also deposits

$1,000 in the account on January 1 of each of the next four years (2015-2018) under the same terms. How much will she have on December 31, 2018 of the fifth year?

c. An aunt of yours is planning to retire and would like her income to be secure.
She said she was approached by a company that offered her annual payments of $50,000 for 20 years, paid in equal semi-annual instalments, beginning one year from the date she enters the program. Your aunt would pay $500,000 to participate in the program. If an appropriate discount rate is 8 percent, should your aunt participate in the program? What is the maximum amount she should pay?

d. A woman wants to save for a dream vacation. She estimates the vacation will cost $50,000. If she has $15,000 to invest today, how many years will she have to invest for until she has enough for the trip if the appropriate discount rate is 5 percent?
Calculate to the nearest full year.

e. The present value of $10,000 to be received in five years is $7,472. What is the discount rate?