What is the present value (PV) of receiving $1100 per year with certainty at the end of the next three years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 2P
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1. Suppose the term structure of interest rates is shown below:
1 year
Term
Rate
(EAR%)
5.00%
2 years
4.80%
3 years
4.60%
5 years
4.50%
10 years
4.25%
20 years
4.15%
What is the present value (PV) of receiving $1100 per year with certainty at the end of the next three
years?
Transcribed Image Text:1. Suppose the term structure of interest rates is shown below: 1 year Term Rate (EAR%) 5.00% 2 years 4.80% 3 years 4.60% 5 years 4.50% 10 years 4.25% 20 years 4.15% What is the present value (PV) of receiving $1100 per year with certainty at the end of the next three years?
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