Problem
1. Determine the present value of an annuity that pays out $100 at the end of each year
(a) for 5 years
(b) in perpetuity if the interest rate is 10% compounded annually.
2. A government bond that originally cost $500 with a yield of 6% has 5 years left before redemption. Determine its present value if the prevailing rate of interest is 15%.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.