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You're trying to choose between two different investments, both of which have up-front costs of $25,000. Investment A returns $40,000 in six years. Investment B returns S60,000 in 11 years. Which of these investments has the higher rate of return? 6. A. 9.67% B. 12.09% C. 7.19% D. 8.28% 7. You will be receiving the following payments from a friend $100 one year from now, $145 two years from now, and $125 three years from now. Calculate the present value of these payments given that the rate of interest is 6% per year. Also, calculate the future value of the payments in year three. A. $223.45 B. $412.55 C. $239,66 D. $328.34 8a. Someone wants you to lend her $3000 today. She promises to pay you $1000 one year from today, $1050 two years from today and $1100 three years from today. Alternatively, you can earn 3% compounded annually by putting the money in a savings account. What is the NPV of this loan offer? Should you lend her the money? Yes A. $4.22 B. $-121.09 C. $12.75 D. $-32.74 No Yes No 0 8b. How large should the last payment be, the first two being the same as in part 2a, for you to be willing to lend her the money? You have the chance to buy a used widget-making machine for $200. You estimate that it will last for two more years, after which it will be worthless, but that it will bring in $150 revenue during each of those two years. If the interest rte is 8% per year, should you buy it? 9. NPV A. $67.49 B. $73.42 C. $-34.43 D. $-12.06 Yes Yes No 0

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