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A local bank advertises the following deal: Pay us $100 a year for 10 years and then we will pay you (or your beneficiaries) $100
A local bank advertises the following deal: Pay us $100 a year for 10 years and then we will pay you (or your beneficiaries) $100 a year forever. a. Calculate the present value of your payments to the bank, if the interest rate available on other deposits is 4.50%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value $ 0 b. What is the present value of a $100 perpetiuty deferred for 10 years, if the interest rate available on other deposits is 4.50%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value $ c. Is this a good deal? Yes O No
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