1. What is the present value of a 5 year investment that starts with a 2 year annuity of $200 per month followed by a 3 year annuity of $300 per month. Assume the investor requires a 9% rate of return, compounded monthly. What is the PV of this investment and its EAR?
2. Lily’s parents plan to give her $10,000 in 4 years. If Lily can invest at 11% per year until she has $75,000, how long will she wait from now?
3. Find one investment that you believe to be good to add to your current average performing portfolio. Include a discussion of risk when explaining your belief that this is a good investment.