1. What is the present value of the following cash flows (received at the End of the appropriate period): Year 1: 2,000 Year 2: 2,500 Year 3: 3,500 Year 4: 5,500 Year 5: 6,000 Discount rate = 2.5%
2. A company has issued a $20,000, 10 year bond. Each bond pays interest quarterly of 4%. Determine the amount a purchaser has to pay for the bond, if it yield a 12% compounded semiannually.
These are the options
a. PW = $ 31902
b. PW = $ 11902
c. PW = $ 28000
d. PW = $ 32000