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Q No 3: a).

What is the present value of a security that will pay $5,000 in 20 years if securities
of equal risk pay 7% annually?

FV
PV = n
(1+i)

5000
=
(1+0.07)20

5000
=
3.869684

PV = 1,292.10

Present value is $1,292.10

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