What is the value today of receiving $2,593.00 per year forever? Assume the first payment is made 8.00 years from today and the discount rate is 6.00%.
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Answer format: Currency: Round to: 2 decimal places.
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#4
If you are willing to pay $49,200.00 today to receive $4,333.00 per year forever then your required rate of return must be ____%. Assume the first payment is received one year from today.
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Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
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#5
If you are willing to pay $20,149.00 today to receive a perpetuity with the first payment occurring next year then the payment must be $______. Assume a 13.00% discount rate.
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Answer format: Currency: Round to: 2 decimal places.
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#6
It is _______ for a company to issue equity than debt; it is ________ for an investor to buy equity in a company than debt in the same firm.
a. safer; safer
b. safer; riskier
c. riskier; safer
d. riskier; riskier
e. none of the above
enter a, b, c, d or e
#3
Value of payment 8 year from now:
Present value of annuity of infinite time = cash flow/ interest rate
Cash flow =$2593
Interest rate r= 6%
PV= 2593/0.06
= 43,216.67
Now this present value is for 8 years from now,
So it is a future value for today
N= 8 years
R= 6%
Future Value = Present Value * (1 + interest rate%)^n
43216.67= PV* (1+0.06)^8
PV= 43216.67/1.5938= $27,115.5
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