1. An investment will pay $100 at the end of each of the next 3 years, $250 at the end of Year 4, $300 at the end of Year 5, and $600 at the end of Year 6.
a. If other investments of equal risk earn 5% annually, what is its present value? Round your answer to the nearest cent.
b. If other investments of equal risk earn 5% annually, what is its future value? Round your answer to the nearest cent.
2. Xyz Co. can earn $9 per share forever. You can take 20% of their earnings and invest it in a factory that will earn 8%. Shareholders need to earn 10%. What is the PVGO and the AIP.