1.Present value: Tracy Chapman is saving to buy a house in five years. She plans to put 20 percent down at that time, and she believes that she will need $35,000 for the down payment. If Tracy can invest in a fund that pays 9.25 percent annually, how much will she need to invest today?
2.Kronka, Inc., is expecting cash inflows of $13,000, $11,500, $12,750, and $9,635 over the next four years. What is the present value of these cash flows if the appropriate discount rate is 8 percent?
3.Your grandfather has agreed to deposit a certain amount of money each year into an account paying 7.25 percent annually to help you go to graduate school. Starting next year, and for the following four years, he plans to deposit $2,250, $8,150, $7,675, $6,125, and $12,345 into the account. How much will you have at the end of the five years?