Question
The interest rate is 10% but the government offers you a subsidized perpetual loan for $1 million at 5%. In other words, you get the
The interest rate is 10% but the government offers you a subsidized perpetual loan for $1 million at 5%. In other words, you get the $1 million today and, in return, you pay the government $50,000 a year forever (you are immortal). How much is this subsidy worth?
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Basic Finance An Introduction to Financial Institutions, Investments and Management
Authors: Herbert B. Mayo
11th Edition
1285425790, 1285425795, 9781305464988 , 978-1285425795
