Problem 1. In payment for your engineering services a client offers you a choice between:
(i) $10000 now, or (ii) a share in the project which you are certain you will be able to cash in for $16500 in five years.
If you choose the $10,000 now it could be reinvested at an annual interest rate of i = 10%. Which is the most profitable choice? Show the work and values that give your conclusion.
Problem 2. We are considering the following investment proposal. If we deposit $700 now, the end of year 0, we will receive $4200 at the end of 10 years. What rate of interest compounded annually is being offered?