1) Find present value of the cash flow of $5000 per year if annual rate of interest is 4.5%. Suppose that interest is compounded annually and round to nearest cent.
2) Suppose that yearly rate of price inflation for housing in next ten years is 4.5% and suppose that this is compounded yearly. House costing $780,000 today will cost more in 10 years. How much will it cost in 10 years rounded to nearest cent?