Suppose the borrowing rate rb10 compounded annually however


Suppose the borrowing rate rB=10% compounded annually. However, the lending rate (or equivalently, the interest rate on deposits) is only 8% compounded annually. Compute the difference between the upper and lower bounds on the price of an perpetuity that pays A=10,000$ per year.

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Financial Management: Suppose the borrowing rate rb10 compounded annually however
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