You are offered a note that pays $580 in 12 months (or 365 days) for...
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You are offered a note that pays $580 in 12 months (or 365 days) for $550. You have $550 in a bank that pays a 5.312 nominal rate, with 365 daily compounding. You plan to leave the money in the bank if you dont buy the note. The note is riskless. Should you buy it? Why?
There are three methods to answer this question. Find all numbers, present values, future values, and effective rares, and compare them to support your answer. Show results from three methods are consistant.
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