British government 3.7% perpetuities pay 3.7 interest at the end of each year forever. Another bond, 2.2% perpetuities, pays 2.20 a year forever.
a. What is the value of 3.7% perpetuities if the long-term interest rate is 5.7%? (Round your answer to 2 decimal places.)
b. What is the value of 2.20% perpetuities? (Round your answer to 2 decimal places.)