1. Projected life of 12 years is offered for sale. If annual net cash flows are expected to be roughly $ 500,000 determine the appropriate purchase price for the property when interest is 12%: (a) compounded annually, and (b) compounded continuously.
2. An investor plans to invest $50,000 at the end of every year for 10 years at an interest rate of 8 % compounded annually. What is the expected value of this investment 10 years from now? What single sum of money invested now at 12 % compounded annually would generate the same expected future worth?