What is the present value of a perpetuity of $ 7,000 that provides the first payment in 6 years? Your opportunity cost is 10%, continuously compounded.
Solution:
Present value of perpetuity=Constant Annual Payment* Present value interest factor for a perpetuity
=A/{(e^r)-1}
Present value of perpetuity at beginning of year 1 i.e at time 0( assuming annuity given at end of the year)=66558.3236 / e^(0.1*5)=40369.66 $.
What is the present value of a perpetuity of $ 7,000 that provides the first payment...
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what is the present value of 4300 per year at discount
of 10%if first payment is received in 6 years from now and the last
payment is received 20 years from now
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