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Assume that an investment is governed by compound interest at a level interest rate. The present value of $K payable at the end of two
Assume that an investment is governed by compound interest at a level interest rate. The present value of $K payable at the end of two years is $1039.98. If the force of interest is cut in half (resulting in a change in the level interest rate), the present value of $K payable at the end of two years is $1060.78. What is the present value of $K payable at then end of two years if the annual effective discount rate is cut in half?
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