28.)What is the price (in $) of a perpetuity paying $505 annually when the interest rate...
28.)What is the price (in $) of a perpetuity paying $505 annually when the interest rate is 7.8 percent? Round your answer to at least 2 decimal places.
29.) If a perpetuity has a price of $700 and an annual interest payment of $45, what is the interest rate (in %)? Round your answer to at least 2 decimal places.
Homework Answers
Present value of perpetuity=Annual cash flows/interest rate
1.Price of perpetuity=505/0.078
=$6474.36(Approx).
2.Interest rate=45/700
=6.43%(Approx)
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