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Calculate the present value of payments

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A local bank advertises the following deal: Pay us $100 at the end of each year for 12 years and then we will pay you [or your beneficiaries) $100 at the end of each year forever."

a. Calculate the present value of your payments to the bank if the interest rate is 5.75%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. What is the present value of a $100 perpetuity deferred for 12 years if the interest rate is 5.75%. {Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM133072242

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