Smallest possible effective rate of interest

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Reference no: EM131905715

1. A perpetuity will make annual payments, with the first payment coming 13 years from now. The first payment is for 4600 dollars and each payment that follows is 110 dollars more than the one before. If the effective rate of interest is 5.1 percent, what is the present value?

Answer = dollars. (3 decimal place)

2. A perpetuity pays 520 dollars annually. At the time of the second payment, the present value of the entire perpetuity (including the first payment) is 6800 dollars. What is the smallest possible effective rate of interest?

Answer = percent. (3 decimal place)

Reference no: EM131905715

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