Suppose the term structure of interest rates is shown below: Consider an investment that pays $1900 certain at the end of each of the next four years. If the investment costs $6650 and has a net present value (NPV)of $142.31, then the four year risk-free interest rate is closest to ________.
A)4.01%
B)3.51%
C)5.01%
D)4.51%

Question

Suppose the term structure of interest rates is shown below:  Consider an investment that pays $1900 certain at the end of each of the next four years. If the investment costs $6650 and has a net present value (NPV)of $142.31, then the four year risk-free interest rate is closest to ________.
A)4.01% 
B)3.51% 
C)5.01% 
D)4.51%

Quizplus · Accepted Answer

The Answer of Suppose the term structure of interest rates is shown below:  Consider an investment that pays $1900 certain at the end of each of the next four years. If the investment costs $6650 and has a net present value (NPV)of $142.31, then the four year risk-free interest rate is closest to ________.
A)4.01% 
B)3.51% 
C)5.01% 
D)4.51%

Suppose the Term Structure of Interest Rates Is Shown Below