Calculate the value of perpetuities


Question: British government 4 percent perpetuities pay four (4) pounds interest every year forever. Another bond, 2 ½% perpetuities, pays 2.50 pounds a year forever. Calculate the value of 4% perpetuities if the long-term interest rate is 6 percent? Calculate the value of 2 ½% perpetuities?

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Finance Basics: Calculate the value of perpetuities
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