A consol paying $20 annually when the interest rate is 5 percent has a price of

1 answer:

8 0

Answer: $ 400 .
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Explanation:
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Note that a "consol" is a "perpetuity".
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To find the "PV" (Present Value) of a perpetuity, we use the equation: PV = C / r = Current value / interest rate

= $20 / (5%) = $20 / (5/100) = $20 / (0.05) = $400 .
___________________________________________________

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Step-by-step explanation:

We need to find the value of p in the equation $6-8p=38$

Solving to find value of p:

$6-8p=38\\Adding\,\,-6\,\,on\,\,both\,\,sides:\\6-8p-6=38-6\\-8p=32\\Divide\,\,both\,\,sides\,\,by\,\,-8\\\frac{-8p}{-8}=\frac{32}{-8}\\p=-4$

So, solving the equation $6-8p=38$ we get value of p = -4

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