What is the value of perpetuities

Reference no: EM133269811

Question - Perpetuities British government 5% perpetuities pay $5 interest each year forever. Another bond, 3% perpetuities, pays $3 a year forever.

a. What is the value of 5% perpetuities if the long-term interest rate is 3.0%?

b. What is the value of 3% perpetuities?

Reference no: EM133269811

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