Suppose the borrowing rate is rB = 10% compounded annually. However, the lending rate (or equivalently, the deposit rate) is only 8% compounded annually. Calculate the difference between the upper and lower bounds of the price of a continuum that pays A=10,000 per year. Please write your answer rounded to the nearest dollar, if your answer is 23,456,789 you should answer 23457.

Answer rating: 100% (QA)

To calculate the difference between the upper and lower bounds of the price of a continuu... View the full answer