value: 6.00 points Suppose a perpetual bond pays €3,200/yr to its owner. (Round your answers to...

Question

Question

value: 6.00 points Suppose a perpetual bond pays €3,200/yr to its owner. (Round your answers to the nearest whole number. Do

Answer 1

Answer #1

a. The present value of perpetual series of cash flows = A /i

Present value of bond = 3200 / 0.04 = 80000

b. Present value of bond = 3200 / 0.05 = 64000

Answer 2

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