Gustav owns a perpetuity which pays 200 per year starting at the end of year 2....

Gustav owns a perpetuity which pays 200 per year starting at the end of year 2. Ingrid owns a perpetuity that pays deposits X at the end of each 6 months, beginning 6 months from now. Assume a nominal annual interest rate of 8%. For what value of X is the present value of the two perpetuities equal.

Solutions

Expert Solution

Part(i) is related to Gustav and Part(ii) is related to Ingrid.

Therefore, Value of x = 89.15

ekkarill92 answered 1 year ago

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