Reference no: EM132272996

Compute the present value for the following:

1. An investment that will pay you $1,000 in one year, another $1,000 in two years, and a third payment of $1,000 in three years (e.g., three payments of $1,000 to be paid once a year for three years). The discount rate is 4%.
2. The same three $1,000 payments as in part a) above, but with a 6% discount rate
3. An investment that will pay you $2,000 in one year, another $1,500 in two years, and a third payment of $3,000 in three years. The discount rate is 4%.

Compute the value of the following bonds assuming a 3% discount rate (required rate of return): (USE EXCEL)

1. A zero-coupon bond that pays $1,000 in five years
2. A bond that pays $1,000 in five years, with five annual coupon payments of $20 each
3. What is the coupon rate if coupon payments are $20 per year? At what discount rate would the value of the bond be "at par" (e.g., be worth $1,000?). Explain your reasoning.