British government 50 perpetuities pay pound50 interest at, Ask an Expert

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British government 5.0% perpetuities pay £5.0 interest at the end of each year forever. Another bond, 3.5% perpetuities, pays £3.50 a year forever.

a. What is the value of 5.0% perpetuities if the long-term interest rate is 7.0%? (Round your answer to 2 decimal places.)

Perpetuity value £

b. What is the value of 3.50% perpetuities? (Round your answer to 2 decimal places.)

Perpetuity value £

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Financial Management, Finance

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