Question FM 11/11/2011 9:32

You can receive one of the following two payment streams:

i) 100 at time 0, 100 at time 5, 200 at time n, and 300 at time 2n.
ii) 600 at time 10.

At an annual effective interest rate of i, the present values of the two streams are equal.
Given $\nu=0.7$, determine i.

Ans: $2.34\%$