Certificate A pays $1,000 in 4 months and another $1,000 in 8 months. Certificate B pays $1,000 in 5 months and another $1,000 in 9 months. If the current rate of return required on this type of investment certificate is 5.75%, determine the current value of each of the certificates. Give an explanation for the lower value of

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The Answer is A = $1,944.28 and B = $1,935.26. Since the payments from B are received a month after the respective payments from A, certificate B is not as valuable as certificate A.

Certificate a Pays $1,000 in 4 Months and Another $1,000