1. What constant payment for the next 10 years (starting 1 year from now, 10 payments) would be equivalent to receiving $800 every other year starting 10 years from now. Assume the annual cost of capital is 12%.
2. Suppose that you are evaluating the following investment opportunity. At the end of the the next five years you estimate that you will receive the following cash flows, $700, $900, $200, $550, and $100. At the end of every year following year five you will receive a cash flow that is 2% larger than the prior cash flow. If the cost of capital is 6% how much should you be willing to invest in this opportunity?