4) An investment offers to pay $ 100 a year forever starting at the end of...
Homework Answers
Correct Answer is $850.73
Explanation:
As the investment offers $100 from the end of 6th Year till perpetuity,
The present value at the end of 5th Year = Coupon Amount / Rate = $100 / 0.08 = $1,250
Hence, the present value of $ 1,250 today will be = P / (1+r)5 = $1,250 / (1+0.08)5 = $1,250 / 1.469328 = $850.73
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4) An investment offers to pay $ 100 a year forever starting
at the end of...
Why the answer is B? n investment offers to pay $ 100 a year forever starting...
Why the answer is B?
n investment offers to pay $ 100 a year forever starting at the end of ear 6 If the interest rate is 8%, what is the investment's value today? Yeur6 A. $787.71 B, $850.73 C. $1,250 D. $1,586.87 It will be worth 100/0.08 S1,250 at the end of year 5, and therefore worth $1,250/1.0865 $850.73 today. 1 00 008(H 1250
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14) b) The British government has consol bonds (perpetuities) outstanding that pay £100 per year, forever....
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3. (1 pts) Suppose a mutual fund offers you an investment opportunity. For each $100 investment...
3. (1 pts) Suppose a mutual fund offers you an investment opportunity. For each $100 investment today, it will pay you $5 per year forever. The interest rate in the loanable funds market is 10%. You can inherit your investment or sell anytime. Would you invest? Why or why not? Show your work!
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Please show your work An investment promises to pay you $7,000 per year forever with the...
Please show your work
An investment promises to pay you $7,000 per year forever with the first payment today. If alternative investments of similar risk earn 1% per year, determine the maximum you would be willing to pay for this investment Enter your response below (rounded to 2 decimal places).
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You will receive 100 British bonds that pay interest forever. The amount of annual interest payments that you we ece ve is S5.000. If you could invest yOur money at 4.25%, how much are these bonds worth today? O A $55,000 B. $197,250 C. $250,000 O D. $117.647 ? E. $64,480 are considering the purchase of XYZ Company's common stock which will pay a $1.00 per share dividend one year from the date of purchase. The divid end is expected...
8) The British government has consol bonds (perpetuities) outstanding that pay £100 per year forever....
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Why the answer is B?
n investment offers to pay $ 100 a year forever starting at the end of ear 6 If the interest rate is 8%, what is the investment's value today? Yeur6 A. $787.71 B, $850.73 C. $1,250 D. $1,586.87 It will be worth 100/0.08 S1,250 at the end of year 5, and therefore worth $1,250/1.0865 $850.73 today. 1 00 008(H 1250
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3. (1 pts) Suppose a mutual fund offers you an investment opportunity. For each $100 investment today, it will pay you $5 per year forever. The interest rate in the loanable funds market is 10%. You can inherit your investment or sell anytime. Would you invest? Why or why not? Show your work!
Please show your work
An investment promises to pay you $7,000 per year forever with the first payment today. If alternative investments of similar risk earn 1% per year, determine the maximum you would be willing to pay for this investment Enter your response below (rounded to 2 decimal places).
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8) The British government has consol bonds (perpetuities) outstanding that pay £100 per year forever. Assume that the current discount rate is 4% a) What is the value of the bond today in £? b) If this consol trades in the market today at £2,480, what rate of return will an investor earn from this investment? 9) The Elysian Trust has set up a program that provides free school education for underprivileged children in India and Nepal. The Elysian...
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