Question 1 - Chuck Brown will receive from his investment cash flows of $3,155, $3,470, and $3,820 at the end of years 1, 2 and 3 respectively. If he can earn 7.5 percent on any investment that he makes, what is the future value of his investment cash flows at the end of three years?
Question 2 - You are evaluating a growing perpetuity product from a large financial services firm. The product promises an initial payment of $25,000 at the end of this year and subsequent payments that will thereafter grow at a rate of 0.04 annually. If you use a discount rate of 0.07 for investment products, what is the present value of this growing perpetuity?