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 ________

Suppose the term structure of interest rates is shown below:

Term 1 year 2 years 3 years 5 years 10 years 20 years
Rate
(EAR%) 5.00% 4.80% 4.60% 4.50% 4.25% 4.15%

A) 4.01%
B) 3.51%
C) 5.01%
D) 4.51%


Answer: D

Business

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