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1. If you buy consols, which provides you interest 200 forever, what is present value of all the future cash flow (the price of consols )? The risk-free interest rate is 2%. (Required) 2. (Required) In-class 2 100 100(1+5%) 100 (1 + 5%)"-1 0 1 2 n If you buy consols, which provides the above cashflows, what is present value of all the future cash flow (the price of consols )? The risk-free interest rate is 7% PV(growing perpetuities)=100/(7%-5%)=5000