Question

n investment offers $8,700 per year for 17 years, with the first payment occurring one year...

n investment offers $8,700 per year for 17 years, with the first payment occurring one year from now. Assume the required return is 11 percent. What would the value be if the payments occurred forever?

Homework Answers

Answer #1
When annual payment received forever
Annual payment 8700
Rate of return 11%
Period Perpetuity
Therefore,
value of investment = 8700/11% = $ 79090.91
Note:
value of investment when annual payment received for 17 yrs
Annual payment 8700
Rate of return 11%
Annuity PVf at 11% for 17 years 7.54879
Value of investment 65674.47
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
An investment offers $4,800 per year for 19 years, with the first payment occurring one year...
An investment offers $4,800 per year for 19 years, with the first payment occurring one year from now. If the required return is 11 percent, the present value of the investment is $  . If the payments occurred for 31 years, the present value of the investment would be $  . If the payments occurred for 81 years, the present value of the investment would be $  . If the payments last forever, the present value would be $  (Do not include the dollar...
An investment offers $9,200 per year for 17 years, with the first payment occurring one year...
An investment offers $9,200 per year for 17 years, with the first payment occurring one year from now. Assume the required return is 12 percent. What is the value of the investment today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value            $ What would the value be if the payments occurred for 42 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value...
SHOW ALL WORK An investment offers $7,300 per year for 15 years, with the first payment...
SHOW ALL WORK An investment offers $7,300 per year for 15 years, with the first payment occurring one year from now. If the required return is 5.15 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever?
An investment offers $5,200 per year for 20 years, with the first payment occurring one year...
An investment offers $5,200 per year for 20 years, with the first payment occurring one year from now.    If the required return is 7 percent, what is the value of the investment today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) What would the value today be if the payments occurred for 45 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) What would the...
An investment offers $10,000 per year for 20 years, with the first payment occurring 1 year...
An investment offers $10,000 per year for 20 years, with the first payment occurring 1 year from now. If the required rate of return is 5%, what is the value of the investment? What would the value be if the payments occurred forever? Please pick answers, respectively. A. $128,431.2 and $ 250,000 B. $121,538.2 and $150,000 C. $124,622.1 and $ 150,000 D. $124,622.1 and $ 200,000 E. $128,431.2 and $ 200,000
An investment offers $5,100 per year for 10 years, with the first payment occurring one year...
An investment offers $5,100 per year for 10 years, with the first payment occurring one year from now. a. If the required return is 5 percent, what is the value of the investment today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What would the value today be if the payments occurred for 35 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What...
An investment offers $6,500 per year for 20 years, with the first payment occurring one year...
An investment offers $6,500 per year for 20 years, with the first payment occurring one year from now.    If the required return is 7 percent, what is the value of the investment? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)   Present value $    What would the value be if the payments occurred for 45 years? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)...
An investment offers $5,500 per year, with the first payment occurring one year from now. The...
An investment offers $5,500 per year, with the first payment occurring one year from now. The required return is 7 percent. a. What would the value be today if the payments occurred for 20 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b.What would the value be today if the payments occurred for 45 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c.What would...
An investment offers $6,300 per year, with the first payment occurring one year from now. The...
An investment offers $6,300 per year, with the first payment occurring one year from now. The required return is 5 percent. a. What would the value be today if the payments occurred for 10 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What would the value be today if the payments occurred for 35 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c....
An investment offers $10,250 per year for 18 years, with the first payment occurring one year...
An investment offers $10,250 per year for 18 years, with the first payment occurring one year from today. If the required return is 8%, what is the present value of the investment?