Question

Suppose the borrowing rate r_B = 10\%r
B
​
=10% compounded annually. However,

the lending rate (or equivalently, the interest rate on deposits) is

only 8\%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 23,456.78923,456.789 then you should submit an answer of 2345723457

Answer 1

25000