1. An investment is expected to produce $1,242 at the end of each year for the next 9 years. Other investments of similar riskiness available to you are yielding 11.8 percent return. What is the maximum you should be willing to pay for this investment?
2. You are thinking of investing in a project that will pay you $100,000 5 years from now, and another $100,000 11 years from now. You think the right discount rate for the project is 5.6%. What is the maximum you should be willing to pay for this investment?