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What is the PV of a British consol bond paying $250 in interest every year in perpetuity? Assume interest rate of 2.5%. What will the

  1. What is the PV of a British consol bond paying $250 in interest every year in perpetuity? Assume interest rate of 2.5%. What will the value be if payments on the annuity begin immediately?

  1. If you deposit $10,000 in a bank that pays 8% compounded quarterly, how much will be in your account after 6 years?
  1. What is the present value of a security that will pay $5,000 in 10 years if securities of equal risk pay 6% monthly?
  1. Bank A pays 4% interest compounded annually on deposits, while Bank B pays 3.5% compounded daily. Based on the EAR (or EFF%), which bank should you use?

  1. Credit card issuers must by law print their annual percentage rate on their monthly statements. A common APR is 18%, with interest paid monthly. What is the EFF% on such a loan?

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