Problem

Suppose the Canadian government owes your firm $$1000,$ to be paid in five years. Based on the interest rates in Table $5\mathrm{.}2,$ what is the present value of this cash flow today?

Suppose instead Sherritt owes your firm $$1000.$ Estimate the present value in this case.

Borrower Interest Rate Rating

Government of Canada $1\mathrm{.}570\%$ AAA

Provinc of British Columbia $1\mathrm{.}940\%$ AA high

CIBC $2\mathrm{.}102\%$ AA

Province of Manitoba $2\mathrm{.}065\%$ A high

TransCanada Pipelines Ltd $2\mathrm{.}372\%$ A low

Bell Canada $2\mathrm{.}476\%$ BBB high

Pembina Pipeline Corp $2\mathrm{.}627\%$ BBB

Parkland Fuel Corp $4\mathrm{.}459\%$ BB

Sherritt International Corp $43\mathrm{.}387\%$ CCC high