5. What is the present value of a $5,000 perpetuity under each of the following growth...
(Related to Checkpoint 6.5) (Present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays $6,500 at the end of year one and the annual cash flows grow at a rate of 4% per year indefinitely, if the appropriate discount rate is 11%? What if the appropriate discount rate is 9%?
PRESENT VALUE OF A PERPETUITY What is the present value of a $700 perpetuity if the interest rate is 10%? Round your answer to the nearest cent. $ If interest rates doubled to 20%, what would its present value be? Round your answer to the nearest cent.
PRESENT VALUE OF A PERPETUITY What is the present value of a $600 perpetuity if the interest rate is 6%? Round your answer to the nearest cent. $ If interest rates doubled to 12%, what would its present value be? Round your answer to the nearest cent. $
4. What is the present value of a consul bond (a perpetuity) providing $5,000 per year and a rate of return of 12%?
6-43. (Calculating the present value of a perpetuity) What will be the present value of a tual paym perpe will be its value if the discount rate is changed to 3 percent? ent of £400 per year if the applicable discount rate is 6 percent? What it Related to Checkpoint 6.5
(Related to Checkpoint 6.5 Present value of a growing perpetuity What is the present value o a perpetual stream o cash flows hat pays $6,500 at the end o year one and he annual cash flows grow at a rate o 2% per year indefinitely, if the appropriate discount rate is 12%? what if the appropriate discount rate is 10%? a f the appropriate discount rate is 12%, the present value of the growing perpetuity is S Round to the...
It is January 1, 2019. Find the present value of a $100 perpetuity when the first payment is at the end of year 2019. The discount rate is 6%. It is January 1, 2019. Find the present value of a $100 perpetuity when the first payment is at the end of year 2020. The discount rate is 6%. It is January 1, 2019. Find the present value of a $100 growing perpetuity when the first payment is at the end...
13. What is the present value of a perpetuity that pays $2800 each year? Assume the interest rate is 5% a. $25,200 b. $28,000 c. $39,600 d. $56,000 e. $64,800 14. A company is paying annual dividends. The dividend is $2.00 in one year and grows at 8% every year. However, the company will have to cancel the dividend in the second year to cover the costs of a project. Given 12% discount rate, what is the value of this...
(Present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays $3,500 at the end of year one and the annual cash flows grow at a rate of 4% per year indefinitely, if the appropriate discount rate is 10%? What if the appropriate discount rate is 8%?
When calculating a growing perpetuity, the growth rate is expected to continue forever. Therefore it should not exceed... a. the growth rate of the population in the economy. b. the growth rate of productivity in the economy. c. the growth rate of the general economy (growth in real GDP). d. the return on a large portfolio of stocks from the economy. What is the present value of a growing perpetuity with an expected cash flow of 1,000 next year, a...