A certain investment promises to pay you $2,500 per year forever with the first payment starting 5 years from now. If you can earn a 5% return on similar investments, what's the most you would pay for this investment today?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 16P
icon
Related questions
Question

7) A certain investment promises to pay you $2,500 per year forever with the first payment starting 5 years from now. If you can earn a 5% return on similar investments, what's the most you would pay for this investment today?

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT