Question

What is the present value of the following series of cash payments: $8,000 per year for...

What is the present value of the following series of cash payments: $8,000 per year for four consecutive years starting one year from today, followed by annual cash payments that increase by 2% per year in perpetuity (i.e. cash payment in year 5 is $8,000*1.02, cash payment in year 6 is $8,000*1.022, etc.)? Assume the appropriate discount rate is 5%/year. ( PLZ USE EXCEL TO ANSWER IT)

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Present value of series of cash payments: $8,000 per year for four consecutive years starting one year from today, followed by annual cash payments that increase by 2% per year in perpetuity= $247,754.93

Details of calculation as below:

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 a series of payments received each year for 11 years,...
What is the present value of a series of payments received each year for 11 years, starting with $300 paid one year from now and the payment growing in each subsequent year by 10%? Assume a discount rate of 12%. Please round your answer to the nearest cent.
What is the present value of a perpetual stream cash flows that pays $4000 at the...
What is the present value of a perpetual stream cash flows that pays $4000 at the end of year one and the annual cash flows grow at a rate of 2% per year indefinitely, if the appropriate discount rate is 11%? What if the appropriate disscount rate is 9%? A) If the appropriate discount rate is 11%, the present value of the growing perpetuity is $_____? (Round to nearest cent) B) If the appropriate discount rate is 9%, the present...
A perpetuity will make $1000 payments at the end of each year starting from year 5...
A perpetuity will make $1000 payments at the end of each year starting from year 5 (i.e., first payment will occur at the end of year 5). If the discount rate is 7%, what is the present value of this perpetuity? Round your answer to the nearest dollar; do not include the $ sign (i.e., if the answer is $8,300.3562, enter it as 8,300).
 What is the present value of a perpetual stream of cash flows that pays ​$1,500 at...
 What is the present value of a perpetual stream of cash flows that pays ​$1,500 at the end of year one and the annual cash flows grow at a rate of 3​% per year​ indefinitely, if the appropriate discount rate is 14​%? What if the appropriate discount rate is 12​%? A.  If the appropriate discount rate is 14​%, the present value of the growing perpetuity is? ​ (Round to the nearest​ cent.)
a) What is the present value of a series of payments of $2500 every six years...
a) What is the present value of a series of payments of $2500 every six years in perpetuity with the first payment made immediately, if the annual rate is 8.5% per annum? b) Polycorp debentures are selling for $110 (FV = 100) and mature in 8 years. The coupon rate is 6%pa. What is the effective annual yield on the debentures? c) Polycorp debentures are selling for $96 (FV = 100) and mature in ten years. The coupon rate is...
1. Find the present value of a 30-year annuity-due with semiannual payments in which the first...
1. Find the present value of a 30-year annuity-due with semiannual payments in which the first payment is $20,000, the second payment is $21,600, the third payment is $23,328, the fourth payment is $25,194.24, etc., assuming an annual effective rate of interest of 16%. 2. Find the present value of a varying perpetuity-DUE in which payments are made every two years with the first payment being $245, and each payment thereafter is $150 larger than the previous payment. Assume the...
Two payment streams have the same present value under effective annual interest rate of 8%: 1....
Two payment streams have the same present value under effective annual interest rate of 8%: 1. 5 annual payments of 200, beginning in one year, followed by a monthly perpetuity of $X. 2. 20 payments of 900 every two years, beginning today. Calculate X.
Find the present value of a 20-year annuity with annual payments which pays $600 today and...
Find the present value of a 20-year annuity with annual payments which pays $600 today and each subsequent payment is 5% greater than the preceding payment. The annual effective rate of interest is 10.25%. Answer: 7851.19 Please show which equations you used and please do not use excel to answer this question.
11. Part A) (Present value of a growing? perpetuity) What is the present value of a...
11. Part A) (Present value of a growing? perpetuity) What is the present value of a perpetual stream of cash flows that pays ?$7,000 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 11?%? What if the appropriate discount rate is 9?%? (Round to the nearest? cent.) Part B) (Loan amortization) On December? 31, Beth Klemkosky bought a yacht for ?$50,000. She paid...
What is the present value (PV) today of a stable perpetuity that pays $15,000 every 4...
What is the present value (PV) today of a stable perpetuity that pays $15,000 every 4 years, starting 2 years from today? The appropriate annual discount rate is 19% p.a. Round your answer to the nearest dollar.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT