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Suppose the term structure of​ risk-free interest rates is shown below. Term 1 year 2 years...

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 ​$ ? ​(Round to the nearest​ cent.)

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jeff jeffy answered 1 year ago
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