Subject: Quantitative Theory of Interest

Textbook: The Theory of Interest, by S. Kellison, 3rd Ed.

(1 point) (Exercise 3.32) a) Find the present value of an annuity-immediate which pays 1 at the end of each half-year for 6 years, if the rate of interest is 7.2% convertible semiannually for the first 4 years and 8.7% convertible semiannually for the last 2 years. ANSWER (round off to three decimal digits)= b) Find the present value of an annuity-immediate which pays 1 at the end of each half-year for 6 years, if all payments in the first 4 years are discounted at a nominal interest rate 7.2% convertible semiannually and all payments in the last 2 years are discounted at a nominal interest rate 8.7% convertible semiannually. ANSWER (round off to three decimal digits)=