(a) You have $1000 and are given the choice of two investments. The first
investment returns $1500 to you 3 in three years time. The second investment
returns $3000 in ten years. Assuming a discount rate of 5% p.a. which
investment do you choose?
(b) You have the choice of two income streams. The first involves receiving $2000
immediately. The second involves receiving $1000 in one year and $1500 in two
years. Assuming a discount rate of 8% p.a. which income stream do you choose?
(c) You have the choice of two income streams. The first involves receiving $3000 in
three years and the second involves receiving $3500 in four years. At what
discount rate are you indifferent between these two income streams? (Hint: find
the discount rate that makes the present value of these two income streams
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