24. Spot interest rates and yields (S3.3) You have estimated spot rates as follows:

r1 = 5.00%, r2 = 5.40%, r3 = 5.70%, r4 = 5.90%, r5 = 6.00%.

a. What are the discount factors for each date (i.e., the present value of $1 paid in year t)?

b. Calculate the PV of the following bonds assuming annual coupons and face values of

$1,000: (i) 5%, two-year bond; (ii) 5%, five-year bond; and (iii) 10%, five-year bond.