Problem 1: What is the economic value today of each of the following payment streams if money can earn 7.5%.
a. $1000, $3000, and $2000 due in one, three, and five months, respectively.
b. Two $3000 payments due two and four months from now.
Problem 2: Ninety days ago Stella signed an agreement with Manon requiring her to make three payments of $400 plus interest 90, 150, and 210 days, respectively, from the date of the agreement. Each payment was to include interest on the $400 principal at the rate of 13.5% from the date of the agreement. Stella now wants Manon to renegotiate the agreement and accept a single payment 30 days from now, instead of the three scheduled payments. What payment should Manon require in the new agreement if money is worth 8.5%?