Question: 2. Exercise Two: Compute the Present Value of 250,000 USD (U.S. Dollars), received 25 years from today, if the interest rate is 11.25%, assuming: (a)

2. Exercise Two: Compute the Present Value of 250,000 USD (U.S. Dollars), received 25 years from today, if the interest rate is 11.25%, assuming: (a) simple interest, (b) daily compounding, (c) continuous compounding, (d) verify your discrete compounding answers by using the PV function in Excel - as shown in class. 3. Problem Three: Fiterman Bank expects to receive $500,000 at the end of each year, for the next 20 years. The nominal interest rate is 3.75%. As shown in class, (a) use a Discounted Cash Flow (DCF) model to compute the present value of these future cash flows, (b) use the NPV function to verify your answer from part (a). (2 Points)

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