The present value (PV) of receiving $1100 per year with certainty at the end of the next three years is closest to ________
Suppose the term structure of interest rates is shown below:
Term 1 year 2 years 3 years 5 years 10 years 20 years
Rate
(EAR%) 5.00% 4.80% 4.60% 4.50% 4.25% 4.15%
A) $3010
B) $2408
C) $3612
D) $4214
Answer: A
Business
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