Question 1: You have been offered a unique investment opportunity. If you invest $10,000 today, you will receive $500 one year from now, $1500 two years from now, and $10,000 ten years from now.
a) What is the NPV of the opportunity if the interest rate is 6% per year? Should you take the opportunity?
b) What is the NPV of the opportunity if the interest rate is 2% per year? Should you take it now?
Question 2: What is the present value of $1000 paid at the end of each of the next 100 years if the interest rate is 7% per year?