The Amount of an Endowment Heidi has an investment that generates an income of $35,000/year in perpetuity. Assuming that her income flows continually and her investment earns interest at the rate of 8%/year compounded continuously, what is the present value of her investment?

The Amount of an Endowment Heidi has an investment that generates an income of $35,000/year in perpetuity. Assuming that her income flows continually and her investment earns interest at the rate of 8%/year compounded continuously, what is the present value of her investment?

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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The Amount of an Endowment Heidi has an investment that generates an income of $35,000/year in perpetuity. Assuming
that her income flows continually and her investment earns interest at the rate of 8%/year compounded continuously, what is the
present value of her investment?

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