Use the following information to answer question 1 and 2: Scenario 1: Inflation is 2% per year and the interest rate is 8% per year. Your perpetuity project has cash flows that grow at 1% faster than...

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Use the following information to answer question 1 and 2: Scenario 1: Inflation is 2% per year and the interest rate is 8% per year. Your perpetuity project has cash flows that grow at 1% faster than inflation forever, starting with $20 next year. Question 1 Based on the information from scenario 1, what is the real interest rate?   Question 2 Based on the information from scenario 1, what is the present value of this project?  Question 3 Scenario 2: You must value a perpetual lease. It will cost $100,000 each year in real terms—that is, its proceeds will not grow in real terms, but just contractually keep pace with inflation. The prevailing interest rate is 8% per year, and the inflation rate is 2% per year forever. The first cash flow of your project next year is $100,000 quoted in today’s real dollars. What is the PV of the project? (Warning: Watch the timing and amount of your first payment.). Question 4 Scenario 3: The inflation rate is 1.5% per year. The real rate of return is 2.0% per year. A perpetuity project that paid $100 this year will provide income that grows by the inflation rate. What is the real (inflation adjusted) present value of this project?  Use the following scenario to answer questions 5 and 6.  Scenario 4: Compare two stocks. Both have earned 8% per year on average. However, stock A has oscillated between 6% and 10%. Stock B has oscillated between 3% and 13%. (For simplicity, say that they alternated.) If you had bought $500 in each stock, how much would you have had 10 years later? Question 5 If you bought stock A at $500 how much would you have after 10 years?  Question 6 If you bought stock B at $500 how much would you have after 10 years?