# Finance-valuation of bond,stock,tessury bills,-future value calculation

Feb 3rd, 2012
Studypool Tutor
University of Phoenix
Price: \$5 USD

Tutor description

i) What is the present value of \$810 annuity payment over 4 years if interest rate is 8%? (Round to 2 decimal places) ii) Compute the future value in a year of \$3,500 deposit in year 1 and another 3,000 deposit at the end of year 3 using a 10% interest rate. (Round to 2 decimal places) iii) One year treasury bills currently earn 2.80 percent. you expect I year from now a 1 year treasury bill rate to increase to 3.00 percent and that two year from now, 1 year treasury bill rates will I increase 3.50 percent. The liquidity premium on a 2 year security is 0.10 percent and on3-year securities are 0.20 percent. If the liquidity premium theory is correct what should the current rate be on 3-year treasury securities? (Round to 2 decimal places) iv) A particular security's risk default risk premium is 2 percent. The inflation risk premium is 1.90 percent and the real risk-free rate is 3.80 percent. The security's liquidity risk premium is 0.10 percent maturity risk premium is 0.70 percent. Calc

Word Count: 316
Showing Page: 1/2
i) What is the present value of \$810 annuity payment over 4 years if interest rate is 8%? (Round to 2 decimal places)Answer: Given that,Annuity, A = \$810Period, n = 4 Interest Rate, i = 8%Present Value, PV =?We know that PV = (A/i) [1-{1/ (1+i) n}] = (\$810/.08) [1- {1/ (1.08)4}] = \$2682.82ii) Compute the future value in a year of \$3,500 deposit in year 1 and another 3,000 deposit at the end of year 3 using a 10% interest rate. (Round to 2 decimal places) Answer:Here one deposit is made in year 1 and another deposit is made in year 3. Assuming deposits are made

## Review from student

Studypool Student
" Solid work, thanks. "

1824 tutors are online

### Other Documents

02/03/2012

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors