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Suppose the term structure of risk-free interest rates is shown below. Term 1 year 2 years 3 years 5 years 7 years 10 years 20
Suppose the term structure of risk-free interest rates is shown below. Term 1 year 2 years 3 years 5 years 7 years 10 years 20 years Rate (EAR, %) 1.99 2.41 2.74 3.32 3.76 4.13 4.93 What is the present value of an investment that pays $100 at the end of each of years 1, 2, and 3? If you wanted to value this investment correctly using the annuity formula, which discount rate should you use? The present value of the investment is $ 285.61. (Round to the nearest cent.) To value this investment correctly using the annuity formula, use the discount rate %. (Round to five decimal places.)
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