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Q2 (30 marks, 5 marks each part) The Time Value of Money. 2.1-2.2: The U.S. government has a consol bond which pays $100 per year

Q2 (30 marks, 5 marks each part) The Time Value of Money.

2.1-2.2: The U.S. government has a consol bond which pays $100 per year forever. Assume the current interest rate is 3% per year.

2.1 What is the value of the consol bond immediately after a payment is made?

2.2 What is the value of the consol bond immediately before a payment is made?

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