Answered: securities with different investment…

securities with different investment terms. What is the present value (PV) of cash flows from an investment that yields $6,000 at the end of each year for the next four years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 1P

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Concept explainers

Types of Insurance Contract

Insurance is a contract wherein an individual or entity gets financial protection from the insurance company for any damages or losses incurred. The individual or entity is called the insured, whereas the insurance company is called the insurer. The insured and the insurer enter a legal contract for a fixed term called the insurance term, and the contract is called an insurance policy.

Question

Term in years:
1
2
3
Rate:
1.8%
2.25% 2.30% 2.66% 3.13%
The table above shows the interest rates available from investing in risk-free U.S. Treasury
securities with different investment terms. What is the present value (PV) of cash flows from
an investment that yields $6,000 at the end of each year for the next four years?
O A. $18,111
O B. $22,639
O C. $27,167
O D. $31,695

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