Calculate the present value of your payments to the bank

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Reference no: EM131829059

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 7.25%. (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 7.25%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM131829059

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