You have $5000 to invest for the next year and are considering three alternatives: a money market fund with an average maturity of 30 days offering a current yield of 6% per year. a 1-year savings deposit at a bank offering an interest rate of 7.5% a 20-year U.S. Treasury bond offering a yield to maturity of 9% per year What role does your forecast of future interest rates play in your decisions?

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A: Information Provided: Annuity amount = $1.4 million per year Interest rate = 8%

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A: Using excel PV function to calculate the amount you will be willing to pay for this bond.

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