Also, since we're on the subject of assignments and question 2.4:
"...$2000 that produces cash flows of $700 in year 1, ..."
Does this mean that it's an annuity-immediate and $700 pops into my hands at the end of the year? Or does this mean that $700 is accumulated by the end of the year?
Which of these do you REALLY mean, Mr. Neas?
"...$2000 that produces cash flows of $700 at the end of year 1,..."
"...$2000 that produces cash flows continuously at a rate of $700 per year,..."
My answers for both:
-$146.90 = NPV of the annuity-immediate scenario
-$45.76 = NPV of the continuously-payable scenario
[NEAS: $700 at the end of year 1. The VEE course does not use continously compounding.]