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Round to the nearest cent. Perpetuities. The Canadian Government has once again decided to...

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Accounting

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Round to the nearest cent.

Perpetuities. The Canadian Government has once again decided to issue a consol (a bond with a never-ending interest payment and no maturity date). The bond will pay $60 in interest each year (at the end of the year), but it will never return the principal. The current discount rate for Canadian government bonds is 8.5%. What should this consol bond sell for in the market? What if the interest rate should fall to 7.5%? Rise to 9.5%? Why does the price go up when interest rates fall? Why does the price go down when interest rates rise? If the current discount rate for Canadian government bonds is 8.5%, what should this bond sell for in the market

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