What would you calculate the price of an annuity

Reference no: EM131482153

Question: 1. What would you calculate the price of an annuity paying £12,000 per annum (starting in 12 months' time) to be if the market rate of interest is
(a) 5%,

(b) 10%,

(d) 20%?

2. A government bond guarantees an annual payment of £140 in perpetuity; what will it be priced at, given a market rate of interest of 4%?

Reference no: EM131482153

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