Question
British government 5.0% perpetuities pay 5.0 interest at the end of each year forever. Another bond, 3.5% perpetuities, pays 3.50 a year forever. a. What
| British government 5.0% perpetuities pay 5.0 interest at the end of each year forever. Another bond, 3.5% perpetuities, pays 3.50 a year forever. |
| a. | What is the value of 5.0% perpetuities if the long-term interest rate is 7.0%? (Round your answer to 2 decimal places.) |
| Perpetuity value |
| b. | What is the value of 3.50% perpetuities? (Round your answer to 2 decimal places.) |
| Perpetuity value |
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ISE International Financial Management
Authors: Cheol Eun, Bruce Resnick, Tuugi Chuluun
9th International Edition
1260575314, 9781260575316
