Problem
1. What is the maximum price you would pay for a perpetual annuity that will commence annual payment of £400 in 12 months' time if the market rate of interest is 13%?
2. Is it worth paying £40,000 for a perpetual annuity of £1,500 per annum, commencing payments in 12 months' time, if money can be invested elsewhere at 3%?
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.