As per The Economist (June 24), the Argentinian gov ernment will now issue its first 100year bond, with cash flows denominated in dollars. The bond has a $1,000 face value and the following monthly, endofmonth coupon payments: $10/month for 50 years, $20/month for 20 years, and then $40/month for 30 years. As Argentina has defaulted on its bonds six times in the past 100 years, you decide that a 15%/year required return is an appropriate (geometric) average required return over the entire horizon. Thus, use a required return of 15%/year and answer the following questions.

You might recognize that this bond's series of cash flows consists of three annuities and a single facevalue cash flow at maturity. I will refer to the annuities, in chronological order, as Annuity A, Annuity B, and Annuity C.

(a1) The equations for present value of an ordinary annuity are [in math] C / r ( 1 - 1/(1+r)N ) and [in Excel] -PV(rate, nper,pmt,,0). State the values that you would use for C (pmt), r (rate), and N (nper) for Annuity A. (a2) State the val ues that you would use for C (pmt), r (rate), and N (nper) for Annuity B. You do not need to calculate this present value; just call the answer X (or or !!! or gazillion). (a3) State the values that you would use for C (pmt), r (rate), and N (nper) for Annuity C. You do not need to calculate this present value; just call the answer Z (or or !!! or gazil lion). (b1) Write the simple math equation for transforming X (from part a2) into a time0 value. (b2) Write the sim ple math equation (from part a3) for transforming Z into a time0 value. (b3) Write the simple math equation for transforming the $1,000 facevalue payment into a time0 value.