Perpetuities.$$The Canadian Government has once again decided to issue a consol$($a bond with a$$ never$-$ending interest payment and no maturity$$ date$).$ The bond will pay $$$$80$ in interest each year$($at the end of the$$ year$),$ but it will never return the principal. The current discount rate for Canadian government bonds is $4\mathrm{.}5\%.$ What should this consol bond sell for in the$$ market? What if the interest rate should fall to $3\mathrm{.}5\%?$ Rise to $5\mathrm{.}5\%?$ Why does the price go up when interest rates$$ fall? Why does the price go down when interest rates$$ rise?

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Part $1$

If the current discount rate for Canadian government bonds is $4\mathrm{.}5\%,$ what should this bond sell for in the$$ market?

$$$

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$1777\mathrm{.}78($Round to the nearest$$ cent.$)$

Part $2$

If the interest rate falls to $3\mathrm{.}5\%,$ what should this bond sell for in the$$ market?

$$$

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enter your response here$($Round to the nearest$$ cent.$)$