Tobi owns a perpetuity that will pay $1,500 a year, starting one year from now.

a. At an interest rate of 7.4%, how much is the perpetuity worth today?

b. He offers to sell you all of the remaining payments after the next 25 payments have been paid. What price should you offer him for payments 26 onward if you also desire a rate of return of 7.4%