Question

how to calculate FV of perpetuity

how to calculate FV of perpetuity
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Let's start with an example for easy understanding

We know sum of all natural number are infinite but we define it with the formula n(n+1)/2  

Where n is the number of first n natural numbers

There fore now returning to topic

To calculate the future value of perpetuity we need to define the numbers of periods of payments upto which we want to calculate future value and then it becomes ordinary annuity and we use the same formula of ordinary annuity i.e

FV= PMT×[(1+r)^n - 1 ]/r

( Still any doubt! Please comment)

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
PV Years I/YR P/YR FV 4900 29 ? 4 -11600 HOW TO CALCULATE I/YR
PV Years I/YR P/YR FV 4900 29 ? 4 -11600 HOW TO CALCULATE I/YR
a) Calculate the PV of a perpetuity with a cash flow of $111.11 received every year....
a) Calculate the PV of a perpetuity with a cash flow of $111.11 received every year. The first cash flow occurs in year 1. The interest rate is 11% simple annual rate. b) Calculate the PV of a perpetuity with a cash flow of $222.22 received every second year. The first cash flow occurs in year 2. The interest rate is 11% simple annual rate. c) Calculate the PV of a perpetuity with a cash flow of $333.33 received every...
A perpetuity costs $ 80 (price of perpetuity at ? = 0) and makes annual payments...
A perpetuity costs $ 80 (price of perpetuity at ? = 0) and makes annual payments at the end of the year. The perpetuity pays $1 at the end of year 2, $2 at the end of year 3, ……, and $ ? at the end of year (? + 1). After year (? + 1), the payments remain constant at $ ?. The nominal interest rate is 10% convertible semiannually. Calculate $ ?.
15.a Calculate the FV of (a) an ordinary annuity and (b) an annuity due with payments...
15.a Calculate the FV of (a) an ordinary annuity and (b) an annuity due with payments of $2,000 at the interest rate of 12% per year. (a) $(                     ); (b) $(                            ) 15.b Calculate the PV of (a) an ordinary annuity and (b) the annuity due with 5 payments of $2,000 at the interest rate of 12%. (a) $(                       ); (b) $(                      ) (Please hand write and show all steps of the solution no Excel no typing I need to...
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 size of the scholarship that can be paid in perpetuity at the end...
What is the size of the scholarship that can be paid in perpetuity at the end of every three months from a fund $15,200. Interest is interest is 6.72% compounded annually. *Please use financial calculator method and show the values being entered for PY, CY, I, N, PMT, FV, PV along with your final answer*
. Provide the structure of the Excel commands to calculate pv(present value), fv(future value), rate(interest rate),...
. Provide the structure of the Excel commands to calculate pv(present value), fv(future value), rate(interest rate), pmt(payment), nper(number of periods).
what is the relationship between rate of return, PV, and FV? How changing one will affect...
what is the relationship between rate of return, PV, and FV? How changing one will affect the other?
Perpetuity X has annual payments of 1,2,3,... at the end of each year. Perpetuity Y has...
Perpetuity X has annual payments of 1,2,3,... at the end of each year. Perpetuity Y has annual payments of q, q, 2q, 2q, 3q, 3q, ... at the end of each year. The present value of X is equal to the present value of Y at an annual effective interest rate of 10%. Calculate q. I'm new to perpetuities but basically understand how perpetuities work. I also have a formula for perpetuities that increase every year. I just can't figure...
How much less is a perpetuity of $4,000.00 worth than an annuity due of the same...
How much less is a perpetuity of $4,000.00 worth than an annuity due of the same amount for 40 payments? Assume an interest rate of 12%. (Notice: if the present value of the perpetuity is higher, then the number will be negative.) Multiple Choice $4,318.54 $3,598.79 $3,238.91 $3,958.66
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT