Question
Use the following information on liabilities to calculate the weighted average duration for each liability type in the fill in the box at the bottom
Use the following information on liabilities to calculate the weighted average duration for each liability type in the "fill in the box" at the bottom of table.
Liabilities:
2 year CD deposit with an average interest rate of 3%
| Cash Flow (CF) | Present Value Factor (PVF) |
| $5,822,155 | .971 |
| $4,400,000 | .943 |
| $0 | |
| $0 | |
| $0 |
3 Year Bonds with an average interest rate of 5%
| Cash Flow (CF) | Present Value Factor (PVF) |
| $150,00 | .952 |
| $150,00 | .907 |
| $3,150,000 | .864 |
| $0 | N/A |
| $0 | N/A |
A. Calculate the weighted average duration for the 2-year CD Deposits. show in the x.xx format
B. Calculate the weighted average duration for the 3-year Bonds. show in the x.xx format
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Analysis For Financial Management
Authors: Robert Higgins
6th Edition
0071181172, 9780071181174
