Use the Following Information to Answer the Question(s)below

question 48

Multiple Choice

Use the following information to answer the question(s) below:
Suppose the term structure of risk-free interest rates is given as:
Term 1 year 2 years 3 years 5 years 10 years
Rate 2.25% 2.80% 3.20% 4.10% 6.30%
-The present value of an investment that pays $2000 in one year and $3000 in three years for certain is closest to:

• A)$4707.
• B)$4685.
• C)$4729.
• D)$5000.

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Definitions:

Industrial Fiber

A type of fiber used in manufacturing processes, typically characterized by high strength and durability suitable for industrial applications.

Finished Products

Goods that have completed the manufacturing process and are ready for sale.

Cane Juice

The liquid extract obtained from the crushing of sugarcane, used as a sweetener or beverage.

Molasses

A thick, dark syrup produced during the refining of sugar or from sorghum, used as a sweetener or in industrial alcohol production.