What is the value today of receiving $1,536.00 per year forever? Assume the first payment is made next year and the discount rate is 12.00%.
What is the value today of receiving $2,737.00 per year forever? Assume the first payment is made 6.00 years from today and the discount rate is 12.00%.
a.Value today of perpetuity=Annual inflows/discount rate
=$1536/0.12
=$12800
b.Value as on year 6=$2737/0.12
=$22808.33(Approx)
Hence value today=Value as on year 6*Present value of discounting factor(rate%,time period)
=$22808.33/1.12^5
=$12942.06(Approx).
What is the value today of receiving $1,536.00 per year forever? Assume the first payment is...
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