Chapter A3, Problem 19E

Present Values

Krista Kellman has an opportunity to purchase a government security that will pay $200,000 in

5 years.

Required:

Note: Round answers to two decimal places.

1. Calculate what Krista would pay for the security if the appropriate interest (discount) rate is 6% compounded annually.

2. Calculate what Krista would pay for the security if the appropriate interest (discount) rate is 10% compounded annually.

3. Calculate what Krista would pay for the security if the appropriate interest (discount) rate is 6% compounded semiannually.