1. Assume that today (that is, year 0) is the end of 2017. Your friend is considering investing $10,000 starting at the end of 2018 in an investment account and this cash flow will then grow at an annual rate of 4%. She plans on ending her contribution to the investment account at the end of 2025. If the annual return on the investment account is expected to be 10%, the future value of this investment at the end of 2025 will be closest to:
a) $60,259
b) $100,000
c) $129,170
d) $166,667
2. At the end of a project, the equipment purchased at the beginning is expected to have a positive market value that is greater than the book value. What would be the tax effect?
A) The tax effect would be equal to the expected market value multiplied by the tax rate
B) The tax effect would be equal to the book value multiplied by the tax rate
C) The tax effect would be the difference between the expected market value and the book value, multiplied by the tax rate
D) There would not be a tax effect; it would be zero