Calculate:
a) The present value of a perpetual bond will pay an annual coupon of £4.
The coupon is next payable in 12 months. The coupon will then grow at
4% each year. The discount rate = 8% per annum.

b) An six-year annuity of £7000, starting in five years (first paid at 72
months), with discount rate of 6%

You may give your answer to 2 decimal places.

c) UK Bond “Con 4pc ‘07” offers two annual payments (at 12-months and
24-months) of £4 plus its redemption value of £100. The current
interest rate is r = 8%.