Question
1. Calculate the discount factor for a 3 year, risk-free investment with annual interest rates of...
1. Calculate the discount factor for a 3 year, risk-free investment with annual interest rates of 5%. Why is this number lower than 1?
2. Conversely, why should you expect the compounding factor to be greater than 1?
3. If this same investment grants $750 after 3 years, what is the Present Value of the investment?
4. What would the Future Value of this same investment be after 3 years if you invested $500 today?
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