(A) Reginald is about to lease an apartment for 36 months. The landlord wants him to make the lease payments at the start of the month. The monthly payments are $1, 200 per month. The landlord says he will allow Reginald prepay the rent for the entire lease at a discount. The one time payment due at the beginning of the lease is $38, 336. What is the implied monthly discount rate for the rent? If Reginald is earning 1.2% on his savings monthly, should he pay the rent by month or make a one time payment?

(B) The Canadian Government has once again decided to issue a console (a bond with a never ending interest payment and no maturity date). The bond will pay $90 in interest at the end of each year, but it will never return the principal. The current discount rate for the Canadian Government's bonds is 8.5%. Why does the price go down when the interest rate rises? If the current discount rate for the bonds is 8.5%, what should the bond sell for in the market?