Question: How much would you pay for a perpetuity bond that pays an annual coupon of $80 per year and yields on competing instruments are 5%?

How much would you pay for a perpetuity bond that pays an annual coupon of $80 per year and yields on competing instruments are 5%?

Price offered=$enter your response here (Round your response to the nearest penny.)

Part 2

If competing yields are expected to change to 12%, what is your expected capital gain (or loss)?

Capital Gain / Loss= $enter your response here (Round your response to the nearest penny.)

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