1. Donna plans to save for a vacation to Costa Rica in 18 months. She will be putting the money into a short-term investment account earning 4% annually. How much will Donna have to put away at the beginning of each month if the total package cost for the trip is $3,500?
a. $170.34.
b. $188.37.
c. $212.69.
d. $246.73.
2. Liam bought a piece of equipment for $10,000. He paid $3,000 for upgrades during year 1 and the equipment generates $2,000 in cash flow for year 1. In year 2 the equipment generated $3,000 and in year 3 it generated $4,000, but Liam sells it for $6,000 and pays a $500 commission. What is his IRR?
a. 3.4%.
b. 3.9%.
c. 4.4%.
d. 4.9%