#2#3#4#5#2Payment of $300,000 arrives in period 4.(a) $256,441.26 (b) $1,822,446.81 $1,822,446.81 The present value = 300,000/(1.044)=The value in time period 50 = 300,000 x (1.0446) =Alternatively, you can calculate this as $256,441.26 x (1.0450) =#3(a)I. Cost of RV in present value terms if he pays cash = $55,000.00 II. PV of paying $11,000 in time 1, $12,000 in time 2, $13,000 in time 3, $14,000 in time 4, $15,000 in time 5 = =(11000/1.065) + (12000/(1.065^2)) + (13000/(1.065^3)) + (14000/(1.065^4)) + (15000/(1.065^5)) = = $53,501.32 II. PV of paying 72 monthly payments of $900==PV(0.065/12,6*12,-900) = $53,539.78 3(b) To solve this, try different discount rates in part II untilthe PV equals $55,000r= 5.53587%PV= $55,000.004(a) If you will be making equal deposits into a retirement account for 10 years(with each payment at the end of each year 1 through 10), how much must you deposit each year if the account earns 5% compounded annually and you wish to have$300,000 after 45 years (in time 45)? There are many ways to do this. The easiest is to first bring the time 45 amount to PV.Step 1: PV of 300,000 in 45 years at 5%: $33,388.95 Step 2: Annuity with PV = $33,388.95 and 10 equal annual payments at 5%:($4,324.02)So 10 payments of $4,324.02 is the answer. (b) How does your answer change if the account pays interest compounded0.0041666667Compounded monthly = 5%/12 or .41667% per monthEAR = ((1 + .05/12)^12)-1 = 0.0511618979Step 1: PV of 300,000 in 45 years at .41667% monthly (540 months):$31,767.92 Step 2: Annuity with PV = $31,767.92 and 10 equal annual payments at 5.116%:($4,137.34)So 10 payments of $4,137.34 is the answer.monthly at an annual rate of 5%?5a. You belong to an unusual pension plan because your retirement paymentswill continue forever (and will go to your descendants after you die). If you will receive $36,000 per year at the end of each year starting 40 years from now, what is the present value of your retirement plan if the discount rateis 3.5%?Step 1: Value of the perpetuity in time period 39 = CF/r = $1,028,571.43 Note: this result is a time period 39 cash flow because the perpetuity formula assumesthe first payment is at the end of the time period. So a payment beginning in time40 will give a perpetuity calculation in time period 39.Step 2: Discount 39 periods: $268,881.43 The retirement benefit is worth $268,881.43 today.5b. You belong to an unusual pension plan because your retirement paymentswill continue forever (and will go to your descendants after you die). If you will receive $3,000 per year at the end of each month starting 40 years from now, what is the present value of your retirement plan if the discount rateis 3.5%?Step 1: Value of the perpetuity in time period 479 = CF/r = $1,028,571.43 Note: this result is a time period 479 cash flow because the perpetuity formula assumesthe first payment is at the end of the time period. So a payment beginning in time480 will give a perpetuity calculation in time period 479.Step 2: Discount 479 periods: $254,901.27 The retirement benefit is worth $254,901.27