British government 3.2% perpetuities pay £3.2 interest at the end of each year forever. Another bond, 1.7% perpetuities, pays £1.70 a year forever.
a. What is the value of 3.2% perpetuities if the long-term interest rate is 5.2%? (Round your answer to 2 decimal places.)
Perpetuity value £
b. What is the value of 1.70% perpetuities? (Round your answer to 2 decimal places.)
Perpetuity value £