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You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises...

You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises an initial payment of $15,000 at the end of this year and subsequent payments that will grow at a rate of 3.2 percent annually. If you use a 9 percent discount rate for investments like this, what is the present value of this growing perpetuity? (Round answer to 2 decimal places, e.g. 15.25.)

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Answer #1

Value of the growing perpetuity : payment ÷(rate-growth- $258,620.69 [150004(0.09-0.032) ]

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