Suppose the term structure of interest rates for risk-free zero-coupon bonds is as follows:

Term 1 year 2 year 3 year 4 year 5 year

Rate (EAR)% 4.00 3.50 3.00 2.50 2.00

What is the fair price if a risk-free investment that pays $1000 at the end of the Years 1,2, and 3,

and given that price, what is the single rate of interest that could be used to fairly value this annuity?

Please no excel and show all work