1. You are currently making annual payments to a local bank of $1, 200 per year. Your loan with the bank has a remaining life of 5 years. The interest rate on is 15 percent per year. If you the loan decide to repay the entire loan today, how much would you pay the bank?
2. A corporate financial analyst must calculate the value of an asset which produces year-end annual cash flows of $0 the first year, $2,000 the second year, $3,000 the third year, and $2, 500 the fourth year. Assuming a discount rate of 15 percent, what is the value of this asset?