Question: Suppose the borrowing rate rB=10% compounded annually. However, the lending rate (or equivalently, the interest rate on deposits) is only 8% compounded annually. Compute the
Suppose the borrowing rate rB=10% compounded annually. However, the lending rate (or equivalently, the interest rate on deposits) is only 8% compounded annually. Compute the difference between the upper and lower bounds on the price of an perpetuity that pays A=10,000$ per year. Please submit your answer rounded to the nearest dollar so if your answer is 23,456.789 then you should submit an answer of 23457.
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