Imagine if the government decided to finance its current deficit of $431 billion by issuing a perpetuity that offers a 4% annual yield. How much would the government have to pay bondholders each year in perpetuity? Express your answer in billions of dollars. (Hint: The $431 billion is just the present value of these cash flows at a 4% discount rate.) *Be sure to enter all currency responses without currency symbols or commas, and use two decimal places of precision.

Answer rating: 100% (QA)

To calculate the annual payment that the government would have to make to bondholders in perpetuity ... View the full answer