An investment offers a perpetual cash flow of $5,000 every 6 months. Your required rate of...
An investment offers a perpetual cash flow of $5,000 every 6 months. Your required rate of return for the investment is 8% per year compounded semi-annually. What’s the value of the investment?
Homework Answers
Answer:
Semi annual payment = $5000
Interest rate = 4% ( converted into semi annual rate from annual rate)
Value of investment = Payment/Interest rate
Value of investment = $125,000
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