1. Present ValueWhat is the present value of a $2,400 deposit in year 5 and another $2,900 deposit at the end of year 9 if interest rates are 10 percent?
2. Present Value of a Perpetuity A perpetuity pays $240 per year and interest rates are 6.9 percent. How much would its value change if interest rates increased to 9.4 percent?3. Effective Annual Rate A loan is offered with monthly payments and a 9.25 percent APR. What’s the loan’s effective annual rate (EAR)?4. Determinants of Interest Rate for Individual Securities The Wall Street Journal reports that the rate on 3-year Treasury securities is 8.00 percent, and the 6-year Treasury rate is 8.20 percent. From discussions with your broker, you have determined that expected inflation premium is 3.35 percent next year, 2.95 percent in Year 2, and 3.70 percent in Year 3 and beyond. Further, you expect that real interest rates will be 4.00 percent annually for the foreseeable future. What is the maturity risk premium on the 6-year Treasury security?5. Taxable Equivalent Yield What’s the taxable equivalent yield on a municipal bond with a yield to maturity of 7.25 percent for an investor in the 28 percent marginal tax bracket? (Round your answer to 2 decimal places.)