1. An investment costs $20,000 today and will return $3,000 at the end of each of the next 10 years. What is the interest rate of return on this investment?
2. Investment X offers to pay you $5,300 per year for eight years, whereas Investment Y offers to pay you $7,100 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 6 percent? If the discount rate is 16 percent?