Given an interest rate of 6.85 percent per year, what is the value at Year 7...

Question

Question

Given an interest rate of 6.85 percent per year, what is the value at Year 7 of a perpetual stream of $3,600 payments that begin at Year 18?

Answer 1

Answer #1

Year Year Year Year Year Year Year Year Year Year 1 Year 1 Year 7 Year 8 Year 9 Year 11 Year 13 Year 14 2 3 4 5 10 12 15 16 Y

The formula to calculate the present value of cash flow of a perpetuity is Cash flows/Interest rate The payments begins at ye

Answer 2

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