Mr. Gates sold his successful IT business today in return for a fixed stream of payments to be received over a period of 5 years. Each payment is $100,000. The first payment will be received 6 months after today and the payments will continue semi-annually until the end of the 5^th year. Mr Gates approaches his bank to borrow some money which will be secured by the present value of the future income stream.

(i) What is the Present Value of the future income stream using a semi-annual compounding interest rate of 4.00%?

(ii) What is the Present Value of the future income stream using the same information as for part (i) except that each payment is made at the start of each 6 month period?