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Please solve this problem. Thanks! Please solve number 2 Please do not solve number 1, i have mistakenly added it. Please solve number 2. Thanks!
Please solve this problem. Thanks!
Please solve number 2
Please do not solve number 1, i have mistakenly added it. Please solve number 2. Thanks!
1. Maturity (years) 2 5 Zero-Coupon YTM 3.00% 3.50% 4.00% 4.50% 4.90% 1 3 4 a) What is the price today of a two-year default-free security with a face value of $1000 and an annual coupon rate of 3%? b) What is the price today of a five-year default-free security with a face value of $1000 and an annual coupon rate of 5%? 2. John Star has been offered $10 million payment upfront to write a book about his experiences. If he takes this offer, he will not be able to make $3 million per year that he would otherwise make for the next 4 years. John's opportunity cost of capital is 12% per year. a) What is the NPV of this opportunity? b) What is the IRR of this opportunity closest to? i) 7% ii) 7.3% iii) 7.7%Step by Step Solution
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