1. Using an interest rate of 7%, calculate the present value of $300 to be received in (a) one year, (b) five years, and

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1. Using an interest rate of 7%, calculate the present
value of $300 to be received in (a) one year, (b) five years, and
(c) ten years.
2. Mary plans to purchase a one-year government bonds. The
bonds will pay the holder $1,000 in one year. If Mary requires
a return of at least 2% on such an investment, what is the most he
will be willing to pay for the Bond?
3. Mahsa is considering quitting her job to start a bakery,
her dream work. To do so, she would need to make an investment of
$80,000 today. She estimates that the bakery would generate
revenues of $90,000 over the next five years and would
require $20,000 in expenses. At his current job she earns $50,000.
Therefore, Mahsa estimates that the incremental cash flows from
opening the bakery would be $20,000 per year for the next five
years. Calculate the NPV of the business using a discount rate of
15%. Should Mahsa quit her job and start the bakery?