Question
Answer the following questions using TIME VALUE OF MONEY FUNCTIONS in EXCEL ?. The Impact of Market Rate 1. A note from Faust Corp. will
Answer the following questions using TIME VALUE OF MONEY FUNCTIONS in EXCEL?.
The Impact of Market Rate
1. A note from Faust Corp. will mature and pay $10,000 in three years. The note pays no interest (i.e., zero-interest-bearing.) The current market interest rate for similar bond is 2%. What price is this note selling for today??
2. A note from Faust Corp. will mature and pay $10,000 in three years. The note pays no interest (i.e., zero-interest-bearing.) The current market interest rate for similar bond is 3%. What price is this note selling for today??
3. A note from Faust Corp. will mature and pay $10,000 in three years. The note pays no interest (i.e., zero-interest-bearing.) The current market interest rate for similar bond is 4%. What price is this note selling for today??
4. Given the same amount of time, higher discounting interest rates lead to ______ (higher/lower) present values.
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