1. An investor is considering the following opportunity: He will put capital into a start-up company today. He will not receive any cash flows from the investment until end of the 5th year. At that point, he will receive 10.00 years of $15,400.00 per year. If his discount rate on this investment is 18.00%, what is the value of this opportunity today?
2. What is the value of an FRA that promises to pay a floating rate of 4.96% (compounded semiannually) in exchange for a fixed rate of 5.80% on a principal of $100 million for the 6-month period starting in 18 months?