1.Present value (PV) at Time 0 of £1 at the end of year 3 at a discount rate of 2%

PV = £1 X-^

(1.02)

Discounting factor = , x ' . x ^ = 0.942 = 94.2p

^ (1.02) (1.02) (1.02) ^

2.Present value (PV) at Time 0 of £1 at the end of year 5 at a discount rate of 4%

PV = £1 X-

(1.04)^

Discounting factor =

1 1 1 1 1 (1.04) ^ (1.04) ^ (1.04) ^ (1.04) ^ (1.04)

0.822 = 82.2p 3.Present value (PV) at Time 0 of £1 at the end of year 2 at a discount rate of 9%

PV = £1 X-L

(1.09)2 Discounting factor = = 0-842 = 84.2p