Anch relative has bequeathed you a growing perpetuty The first payment will occur in a year and will be $2.000 Each year after that, you will receive a payment on the anniversary of the last payment that is 85 larger than the last payment. This patem of payments will go on forever Assume that the interest rate is 13% a What is today's value of the bequest? b. What is the value of the bequest immediately after the first payment is made? What is today's value of the bequest? Today's value of the bequest is (Round to the nearest dolar)
Anch relative has bequeathed you a growing perpetuty The first payment will occur in a year and will be $2.000 Each year after that, you will receive a payment on the anniversary of the last payment that is 85 larger than the last payment. This patem of payments will go on forever Assume that the interest rate is 13% a What is today's value of the bequest? b. What is the value of the bequest immediately after the first payment is made? What is today's value of the bequest? Today's value of the bequest is (Round to the nearest dolar)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Anch relative has bequeathed you a growing perpetuity. The first payment will occur in a year and wit be $2,000 Each year after that, you will receive a payment on the anniversary of the last payment that is 8%
larger than the last payment. This pattern of payments will go on forever Assume that the interest rate is 13% per year
a. What is today's value of the bequest?
b. What is the value of the bequest immediately after the first payment is made?
a. What is today's value of the bequest?
Today's value of the bequest is (Round to the nearest dolar)
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