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1) What is today's internal rate of return or effective annual market interest rate (m=1) on a 2 year zero coupon bond that has a
1) What is today's internal rate of return or effective annual market interest rate (m=1) on a 2 year
zero coupon bond that has a face value of $1000, and a market price of $925.
2)Your inheritance will pay you an income in perpetuity of $500 per year starting on
December 31st. If you expect your ongoing opportunity cost to be 3% APR, how much is
the equivalent cash payment now if it is January 1st.
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