### Calculate the present value of your payments to the bank

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##### Reference no: EM131524018

A local bank advertises the following deal: Pay us \$100 at the end of each year for 10 years and then we will pay you (or your beneficiaries) \$100 at the end of each year forever. a. Calculate the present value of your payments to the bank if the interest rate available on other deposits is 6.75%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value \$ b. What is the present value of a \$100 perpetuity deferred for 10 years if the interest rate available on other deposits is 6.75%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Present value \$ c. Is this a good deal? Yes No

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