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An asset was issued 8 months ago. The asset promised to make semi-annual payments (one payment...

An asset was issued 8 months ago. The asset promised to make semi-annual payments (one payment every six months) of $170 each, from the date of issuance, for two years. All payments are equally risky and thus they have the same discount rate. You've decided that the discount rate is 7%. According to these numbers, how much is the asset worth to you today?  Round your answer to the NEAREST DOLLAR.

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Answer #1

The worth of the asset today is the present value of the future payments associated with the asset

The discount rate if 7%

There are 4 months remaining for the next semi-annual payment, 10 months remaining for the subsequent payment and 16 months remaining for the last payment

The present value of future payments = 170/(1+0.07*4/12) + 170/(1+0.07*10/12) + 170/(1+0.07*16/12)

Present value of the future payments = $482.24

Hence, asset worth to you today = $482

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