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The rates in the current par yield curve for the six-monthly periods covering the contract are as follows: 4.00%, 4.125%, 4.30%, 4.60%, 4.875% and 5.25%,
The rates in the current par yield curve for the six-monthly periods covering the contract are as follows: 4.00%, 4.125%, 4.30%, 4.60%, 4.875% and 5.25%, respectively.
The fixed payments to be made to Massa over the next three years, starting in six months are: $80m, $70m, $90m, $110m, $115m and $125m, respectively.
Required:
Construct the zero-coupon rates for the three-year contract period and calculate
the present value of the cash flows to Massa.
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