Your firm spends $5,000 every month on printing and mailing costs, sending statements to customers. If the interest rate is 0.5% per month, what is the present value of eliminating this cost by sending the statements electronically?
Your firm spends $5,000 every month on printing and mailing costs, sending statements to customers. If the interest rate is 0.5% per month, what is the present value of eliminating this cost by sending the statements electronically?
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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Question
Your firm spends
$5,000
every month on printing and mailing costs, sending statements to customers. If the interest rate is
0.5%
per month, what is the present value of eliminating this cost by sending the statements electronically?
Expert Solution
Step 1
Perpetuity refers to equalized stream of payments that are either paid or received for indefinite period of time.
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