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Imagine that the government decided to fund its current deficit of $431 billion dollars by issuing a perpetuity offering a 4% annual return. How much
Imagine that the government decided to fund its current deficit of $431 billion dollars by issuing a perpetuity offering a 4% annual return. How much would the government have to pay bondholders each year in perpetuity? Express your answer in billions of dollars.
(Hint: The $431 billion is just the present value of these cash flows at a discount rate of 4%.)
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