Question: Problem 1 (Required, 20 marks) We consider a perpetuity-immediate which pays some amount at the end of each month. You are given that The amount

Problem 1 (Required, 20 marks) We consider a perpetuity-immediate which pays some amount at the end of each month. You are given that The amount of th payment is max(400, 300(1.01)*) The first payment is made at the end of 1st month. The annual effective interest rate is 20.27% and compound interest is assumed. (a) Find the present value of this perpetuity. (b) What will be the present value of this perpetuity if the annual effective interest rate becomes 10%

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