Question
Suppose the term structure of interest rates is shown below: Term 1 year 2 years 3 years 5 years 10 years 20 years Rate (EAR%)
Suppose the term structure of interest rates is shown below:
Term | 1 year | 2 years | 3 years | 5 years | 10 years | 20 years |
Rate (EAR%) | 5.00% | 4.80% | 4.60% | 4.50% | 4.25% | 4.15% |
What is the NPV of an investment that costs $2500 and pays $1000 certain at the end of one, three, and five years?
| 1. | $152.90 | |
| 2. | -$389.00 | |
| 3. | $128.62 | |
| 4. | $281.10 |
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International Financial Management
Authors: Cheol S. Eun, Bruce G.Resnick
6th Edition
71316973, 978-0071316972, 78034655, 978-0078034657
