Question
1. How much would you like to pay today for a special security, which will pay you $1,000 at the end of the fifth year
1. How much would you like to pay today for a special security, which will pay you $1,000 at the end of the fifth year and another $500 at the end of the seventh year, if you require 10% APR return rate on the security (assume semi-annual compounding)?
Malcom Butler just signed a $6 million 3 year contract. The contract calls for a payment of $3 million 1 year from today, $2 million 2 years from today, and $1 million 3 years from today. What is this contract really worth as of today if he can earn 10% APR on his money (assume annual compounding)?
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