Chuanlong has a liability of 15,000 due in twelve years. This liability will be met with payments of 6,000 in ten years and B in 10+b years. Chuanlong is employing a full immunization strategy using an annual effective interest rate of 4%. Calculate A. 1150 B. 2158 C. 2563 D. 3189 E. 4524

Chuanlong has a liability of 15,000 due in twelve years. This liability will be met with payments of 6,000 in ten years and B in 10+b years. Chuanlong is employing a full immunization strategy using an annual effective interest rate of 4%. Calculate A. 1150 B. 2158 C. 2563 D. 3189 E. 4524

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

please solve this problem without using Excel and show all steps

Chuanlong has a liability of 15,000 due in twelve years. This liability will be met with payments
of 6,000 in ten years and B in 10+b years. Chuanlong is employing a full immunization strategy
using an annual effective interest rate of 4%.
B
Calculate
A. 1150
B. 2158
C. 2563
D. 3189
E. 4524

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