Question: . Two payment plans are considered. Plan A pays $100 immediately, $200 in 2 years and $100 in 3 years. Plan B simply pays $350

. Two payment plans are considered. Plan A pays $100 immediately,

. Two payment plans are considered. Plan A pays $100 immediately, $200 in 2 years and $100 in 3 years. Plan B simply pays $350 immediately. (a) (1 marks) Compare the present values of Plan A and Plan B at 7.8% and 8.5% effective interest rate per year. (b) (2 marks) Assume Plan A is purchased for $350 at the time of the first payment. Prove the existence of a unique yield rate which lies between 7.8% and 8.5%. (c) (2 marks) Using a single iteration of linear interpolation between 7.8% and 8.5%, find an approximate yield rate

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