Please complete the followingtwo applied problems. Show all your calculations and explain your results.Problem 1:
A generous university benefactor has agreed to donate a large amount of money for student scholarships. The money can be provided in one lump sum of $12 million in Year 0 (the current year), or in parts, in which $7 million can be provided at the end of Year 1, and another $7 million can be provided at the end of Year 2.
Describe your answer for each item below in complete sentences, whenever it is necessary. Show all of your calculations and processes for the following points:
Problem 2:The San Diego LLC is considering a three-year project, Project A, involving an initial investment of $80 million and the following cash inflows and probabilities:
Year 0
Year 1
Year 2
Year 3
Probability
Cash Flow($ mil.)
Cash Flow($mil.)
0.2
50
0.1
60
0.3
70
40
0.4
30
20
Initial Investment$80 mil.
Discount Rate8%
Describe your answer for each question in complete sentences, whenever it is necessary. Show all of your calculations and processes for the following points:
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