2. Farmer Brown sold the mineral rights on his farm to Exxon Corporation in exchange for payments of $14,000 per year in perpetuity. Using a discount rate of 6.5 percent, compute the present value of this arrangement

#3. Investment X has the following projected cash flows over the next four years:

Year | Amount |

1 | $5700 |

2 | $4900 |

3 | $4300 |

4 | $2000 |

If the opportunity cost for an investment of this level of risk is 9.1%, what is the most that you should be willing to pay for it?

#4. An investment promises cash inflows in years 1, 2, 3 and 4 of $5,218, $5,303, $15,870, and $17,604 respectively. If your required rate of return is 6.7%, what is the present value of the cash inflows for this project? (to the nearest dollar)

#5. An investment promises cash flows in years 1, 2, and 3 of $39,000. In years 4 and 5, it will pay $61,000. If your required rate of return is 9.4 percent, what is that worth today?

#6. Using a discount rate of 5.7 percent, compute the present value of the following cash flows to the nearest dollar:

Year | Cash Flow |

1 | $8,613 |

2 | $9,169 |

3 | $15,300 |

4 | $19,344 |

5 | $9,378 |

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