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c) d) Find the price of a British Consol that makes quarterly coupon payments indefinitely (Consols are certain government debt issues in the form of
c) d) Find the price of a British Consol that makes quarterly coupon payments indefinitely (Consols are certain government debt issues in the form of perpetual bonds). It pays $1 in the first quarter, $2 in the second quarter, $3 in the third quarter, and $4 in the fourth quarter. The interest rate is 12%, compounded quarterly. You need a 20-year, fixed-rate loan to buy a building for your business for $550,000. Your bank will lend you the money at a 5% APR (semi-annual) for this 240-month loan. However, you can afford monthly payments of only $2,100, so you offer to pay off any remaining loan balance (unpaid principal and interest) at the end of the loan (20 years from now) in the form of a single payment. How large will this payment have to be for you to keep your monthly payments at $2,100
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