What is the price (in $) of a perpetuity paying $529 annually when the interest rate is 6.5 percent?
Present value of perpetuity=Annual cash flows/interest rate
=529/0.065
which is equal to
=$8138.46(Approx).
What is the price (in $) of a perpetuity paying $529 annually when the interest rate...
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What is the market price of a $1,000, 8 percent bond - paying interest semi-annually - if comparable market interest rates drop to 6 percent and the bond matures in 15 years? Is the answer $1,194?
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