Question

(Perpetuities?) What is the present value of the? following? a. A ?$300300 perpetuity discounted back to...

(Perpetuities?) What is the present value of the? following? a. A ?$300300 perpetuity discounted back to the present at 1414 percent b. A ?$4 comma 0004,000 perpetuity discounted back to the present at 1818 percent c. A ?$240240 perpetuity discounted back to the present at 1515 percent d. A ?$6060 perpetuity discounted back to the present at 1111 percent a. What is the present value of a ?$300300 perpetuity discounted back to the present at 1414 ?percent?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Present Value of Perpetuity = Annual Payment / Interest Rate

Answer a.

Annual Payment = $300
Interest Rate = 14%

Present Value of Perpetuity = $300 / 0.14
Present Value of Perpetuity = $2,142.86

Answer b.

Annual Payment = $4,000
Interest Rate = 18%

Present Value of Perpetuity = $4,000 / 0.18
Present Value of Perpetuity = $22,222.22

Answer c.

Annual Payment = $240
Interest Rate = 15%

Present Value of Perpetuity = $240 / 0.15
Present Value of Perpetuity = $1,600.00

Answer d.

Annual Payment = $60
Interest Rate = 11%

Present Value of Perpetuity = $60 / 0.11
Present Value of Perpetuity = $545.45

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What is the present value of $3,500 per year for 9 years discounted back to the...
What is the present value of $3,500 per year for 9 years discounted back to the present at 11 percent? The present value of $3,500 per year for 9 years discounted back to the present at 11 percent is__$ Please show your work.
What is the present value of $2,500 per year for 10 years discounted back to the...
What is the present value of $2,500 per year for 10 years discounted back to the present at 9 percent? Q) The present value of $2,500 per year for 10 years discounted back to the present at 9 percent is__? Please show your work.
Present value​) What is the present value of the following future​ amounts? a. ​$800 to be...
Present value​) What is the present value of the following future​ amounts? a. ​$800 to be received 10 years from now discounted back to the present at 11 percent.b. ​$400 to be received 8 years from now discounted back to the present at 9 percent.c. ​$1,100 to be received 12 years from now discounted back to the present at 3 percent.d. ​$1,200 to be received 6 years from now discounted back to the present at 19 percent.a. What is the...
What's the present value of $19,000 discounted back 5 years if the appropriate interest rate is...
What's the present value of $19,000 discounted back 5 years if the appropriate interest rate is 4.5%, compounded semiannually? Select the correct answer. a. $12,177.83 b. $12,234.63 c. $12,220.43 d. $12,192.03 e. $12,206.23
What is the present value of an ordinary annuity paying ​$1 comma 7501,750 each year for...
What is the present value of an ordinary annuity paying ​$1 comma 7501,750 each year for 1515 ​years, with an interest rate of 7.37.3 percent compounded​ annually? (Round to the nearest​ dollar.) A. ​$15 comma 64115,641 B. ​$14 comma 41114,411 C. ​$20 comma 45420,454 D. ​$18 comma 122
What's the present value of $1,650 discounted back 5 years if the appropriate interest rate is...
What's the present value of $1,650 discounted back 5 years if the appropriate interest rate is 6%, compounded monthly? A. $1,480.15 B. $941.91 C. $1,223.26 D. $1211.03 E. $1,039.77 **Please show each step in detail especially if your using a financial calculator. **
Let PV be the present value of a growing perpetuity (the ‘time 1 perpetuity’) with an...
Let PV be the present value of a growing perpetuity (the ‘time 1 perpetuity’) with an initial payment of C beginning one period from now and a growth rate of g. If we move all the cash flows back in time one period, the present value becomes PV*(1+r) Note that this is the present value of a growing perpetuity with an initial payment of C beginning today (‘time 0 perpetuity’). Question: How do the cash flows of the time 1...
What is the present value of the following annuity? $4,936 every half year at the beginning...
What is the present value of the following annuity? $4,936 every half year at the beginning of the period for the next 4 years, discounted back to the present at 8.33 percent per year, compounded semiannually.
w6 11/12 ​(Related to Checkpoint​ 6.5)  ​(Present value of a growing​ perpetuity)  What is the present...
w6 11/12 ​(Related to Checkpoint​ 6.5)  ​(Present value of a growing​ perpetuity)  What is the present value of a perpetual stream of cash flows that pays ​$2 comma 500 at the end of year one and the annual cash flows grow at a rate of 4​% per year​ indefinitely, if the appropriate discount rate is 13​%? What if the appropriate discount rate is 11​%?
6. Perpetuities Perpetuities are also called annuities with an extended, or unlimited, life. Based on your...
6. Perpetuities Perpetuities are also called annuities with an extended, or unlimited, life. Based on your understanding of perpetuities, answer the following questions. Which of the following are characteristics of a perpetuity? Check all that apply. A. A perpetuity is a series of regularly timed, equal cash flows that is assumed to continue indefinitely into the future. B. The principal amount of a perpetuity is repaid as a lump-sum amount. C. The present value of a perpetuity is calculated by...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT