Tag a. Calculate the present value of an investment that pays $1000 in two years and $2000 in five years for certain.

Question 29. Suppose the term structure of risk-free interest rates is as shown below: 1 year 2 years 3 years 5 years 7 years 10 years 20 years Rate (EAR, %) 1.99 2.41 2.74 3.32 3.76 4.13 4.93 a. Calculate…