Question: Smith forecasts that interest rates will rise over a 5 - year period according to a force of interest function given by delta = .

Smith forecasts that interest rates will rise over a 5-year period according to a force of interest function given by delta =.08+ According to this scheme, what is the average annual compound effective rate for the 5-year period? What are the equivalent effective annual rates for each of years 1,2,3,4, and 5? What is the present value at =2 of 1000 due at t =4?

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