1-Calculate the present worth of the equipment described in question 4 given a 10% discount rate.
2- An entrepreneur has found a way to turn straw into gold, but he needs $5 million to create the necessary machinery. He wants to earn a 25% rate of return per year and recover the investment in 5 years. How much profit must the machines make every year to accomplish his goal?
3-A designer decides to add an additional generation facility to an existing power plant, which costs $4 million. Given an internal rate of return of 7% over a time span of 20 years, how much extra revenue does the new system provide the power plant each year based on annual compounding?
4-You've won a lottery with two options for receiving your prize. One option is to receive $5 million per year for 40 years with an interest rate of 3%. The other option is to receive $222 million upfront. Ignoring taxes, what will result in you receiving the most money?
5- Your friends want to start a landscaping service for 3 months next summer, but need to buy a truck to haul around your equipment. You found a used one for $5,000, but you can make $1,500 per month. At the end of the summer you have a buyer who will pay $1,000 for the beat up truck (salvage value). Over the 3 months the truck has a discount rate of 2%. Draw a cash flow diagram representing this scenario, then explain how much money this venture will either gain or lose.