Solution-Calculate the present value of receiving $2300 per

Calculate the present value of receiving $2300 per year

Reference no: EM13490810

1.Suppose the term structure of risk-free interest rates is as shown below:

1772_risk free.png

a. Calculate the present value of an investment that pays $1000 in two years and $2000 in five years for certain.

b. Calculate the present value of receiving $500 per year, with certainty, at the end of the next five years. To find the rates for the missing years in the table, linearly interpolate between the years for which you do know the rates. (For example, the rate in year 4 would be the average of the rate in year 3 and year 5.)

c. Calculate the present value of receiving $2300 per year, with certainty, for the next 20 years. Infer rates for the missing years using linear interpolation. (Hint : Use a spreadsheet.)

Reference no: EM13490810

Questions Cloud

List and discuss briefly three standards of accountability : Why will there frequently be a difference between the budgeted cost of material in the material purchases budget and the budgeted cash disbursement for material in the cash budget?

How far west of her starting point is she : A girl walks 26 meters at an angle of 39° west of south. How far west of her starting point is she

Traditional system to an activity based cost system : Will the coming years EVA be greater than, less than, or equal to the current year's EVA and effect of changing to the ABC systeman increase in EVA, a decrease in EVA, or neither? Why?

Determine the velocity of the wind : A plane heads due north while a crosswind blows west. The plane's resultant velocity is 620 km/h, 22° west of north. What is the velocity of the wind

Calculate the present value of receiving $2300 per year : Calculate the present value of receiving $2300 per year, with certainty, for the next 20 years. Infer rates for the missing years using linear interpolation. (Hint : Use a spreadsheet.)

Find the maximum velocity of the boat traveling upstream : A river flows at a speed of 12m/s from north to south. A powerboat can move at a constant maximum speed of 23 m/s in still water. find the maximum velocity of the boat traveling upstream

Discuss the implications for auditors conducting audits : Outline the major revisions to the auditing standards and discuss their implications for auditors conducting audits. (Approx 1,000 words essay response)

Find the magnitude of the charge on each ball : Two 2.0-g pith balls hang in air on essentially weightless cotton threads 50-cm long from a common point of support. Find the magnitude of the charge on each ball

Express cash flow statements : Equipment was purchased on 1/1/13 for $20,000. Equipment has a five year life, no salvage value, and is depreciated using the straight-line method. The old equipment is being depreciated on the same basis.

User Account

All Pages

Calculate the present value of receiving $2300 per year

Reference no: EM13490810

Reference no: EM13490810

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT