Present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays $10,000 at the end of year one and then grows at a rate of 4% per year indefinitely? The rate of interest used to discount the cash flows is 12%.
Present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays $10,000 at the end of year one and then grows at a rate of 4% per year indefinitely? The rate of interest used to discount the cash flows is 12%.
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
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Part 1
(Present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays
$10,000
at the end of year one and then grows at a rate of
4%
per year indefinitely? The rate of interest used to discount the cash flows is
12%.
Question content area bottom
Part 1
The present value of the growing perpetuity is
$enter your response here.
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