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1. What is the present value of $50 per year forever, if the current interest rate is 10%? 2. I buy a perpetuity from a

1. What is the present value of $50 per year forever, if the current interest rate is 10%?

2. I buy a perpetuity from a bank today for $200. In five years, after collecting each years payment, I then offer to sell the perpetuity back to the bank. If interest rates havent changed, what should the perpetuity be worth at that time?

Please show manual calculation (not using excel)

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