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Suppose the term structure of risk. Forest rates is as shown below Syr 10 y 4.26 20 yr 5.07 Term REAR) 1 y 1.50 3

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Suppose the term structure of risk. Forest rates is as shown below Syr 10 y 4.26 20 yr 5.07 Term REAR) 1 y 1.50 3 2.63 2 ye 2.35 a. Calculate the present value of an investment that pays $2.500 in two years and $2.000 in the years for an b. Calculate the present of receiving 1000 per year, with certainly at the end of the next ve years. To find the rates for the years in the near Deen the years for which you do know the rates. For example, e Calculate the present value of receiving 12.800 per year with certainly for the next 20 years. Interes for the missing years singinea interpolation. Hint Use a sprchost) a Calculate the present value of an investment that pays $2.500 in two years and $2.000 n ve years to con The present value of the rivestment is $4012.715. Round to the nearest dolar) . Culate the present lue of receiving 5600 per year with certainty, at the end of the netve years to find there for the years in the wie, nearly interpolat between the years for which you do now the For sample the rate in year would be the average rate in year and you 5) The present value of the revestment is (Round to the nearest dolar)

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