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Q2. A perpetuity has a payment stream of P, = 5t + 2 for t >0 at an annual effective interest rate of r. Another

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Q2. A perpetuity has a payment stream of P, = 5t + 2 for t >0 at an annual effective interest rate of r. Another perpetuity pays $40 continuously for the first year, $45 continuously for the second year, and so on, forever with an annual effective interest rate of 5%. The present values of the two perpetuitics are equal. Determine r

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