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A deferred perpetuity that will make its first payment of $1m at the end of the...

A deferred perpetuity that will make its first payment of $1m at the end of the 10th year has a present value of $_______. Use 7.25% as the annual rate.

A. 6.8500m B. 7.3466m C. 7.1942m D. 6.923m

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Answer #1

Value at time 9 = payment at 10 = rate = $13.79 m (1-7.25%] Present value = m $7.3466 [ 13.79 - 1.072549 ]

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