A financial contract incorporates a continuously compounded annual rate of interest of 8%. The contract requires a

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A financial contract incorporates a continuously compounded annual rate of interest of 8%.

The contract requires a first payment of€1 million in 30 days. The contract requires further payments of €1 million every 90 days thereafter until it expires. Base your calculations on a 365-day year.

(a) What is the PV of the first payment?

(b) What is the PV of the second payment?

(c) If the interest rate is 8% compounded quarterly instead, what is the PV of the first payment?

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Financial Management And Real Options

ISBN: 259088

1st Edition

Authors: Jack Broyles

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Question Posted: May 22, 2024 05:01 AM

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A financial contract incorporates a continuously compounded annual rate of interest of 8%. The contract requires a

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Financial Management And Real Options

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