Value of perpetuities if the long-term interest rate

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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 £

Reference no: EM131566243

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