Issued consol bonds with coupon payments

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Reference no: EM13927639

Perpetual Life Corp. has issued consol bonds with coupon payments of $40. (Consols pay interest forever and never mature. They are perpetuities.)

a. If the required rate of return on these bonds at the time they were issued was 4%, at what price were they sold to the public?

Price sold to the public $

b. If the required return today is 8%, at what price do the consols sell?

Current price $

Reference no: EM13927639

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