1) You are considering an investment that will pay you $12,000 the first year, $13,000 the second year, $17,000 the third year, $19,000 the fourth year, $23,000 the fifth year, and $28,000 the sixth year (all payments are at the end of each year).

What is the maximum you would be willing to pay for this investment if your opportunity cost is 11%?

2) You are considering an investment that will pay you $12,000 the first year, $13,000 the second year, $17,000 the third year, $19,000 the fourth year, $23,000 the fifth year, and $28,000 the sixth year. (This is the same series of cash flow as in problem 1)

If this investment is going to cost you $70,000 today what rate of return would you be earning?

3) How much would you be willing to pay for an investment that will pay you and your heirs $16,000 each year in perpetuity if your opportunity cost is 6%?