Suppose that you have purchased an investment product that makes an annual payment of $2,000 at the

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Question:

Suppose that you have purchased an investment product that makes an annual payment of $2,000
at the end of year for next five years. Assume a discount rate of 4% is applicable to similar
investment alternatives.

a) how much would you be willing to pay for the product?

b) Suppose the investment product will make a payment of $1,000 every six months for next five
years, with the first payment to be made in six months from today. How much would you be
willing to pay?