3. A government bond make a promise to pay $30,000 every year in perpetuity, growing at...

 

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3. A government bond make a promise to pay $30,000 every year in perpetuity, growing at 2% rate every year after the first payment. Assume 8% discount rate. a. Calculate the present value of the perpetuity. b. Calculate the present value of the perpetuity if the first payment is made 10 years from today. 3. A government bond make a promise to pay $30,000 every year in perpetuity, growing at 2% rate every year after the first payment. Assume 8% discount rate. a. Calculate the present value of the perpetuity. b. Calculate the present value of the perpetuity if the first payment is made 10 years from today.

Answer rating: 100% (QA)

a To calculate the present value of the perpetuity we can use the formula PV C r where PV is the pre... View the full answer