(question 23)

A local bank advertises the following deal: Pay us $100 a year for 11 years and then we will pay you (or your beneficiaries) $100 a year forever. a. Calculate the present value of your payments to the bank, if the interest rate available on other deposits is 5.25%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value b. What is the present value of a $100 perpetiuty deferred for 11 years, if the interest rate available on other deposits is 5.25%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value ta c. Is this a good deal? No Yes