Mary is going to receive a 30-year annuity of $8,000. Nancy is going to receive a perpetuity

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Mary is going to receive a 30-year annuity of $8,000. Nancy is going to receive a perpetuity of $8,000. If the appropriate interest rate is 9 percent, how much more is Nancy's cash flow worth?

Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...
Perpetuity
Perpetuity refers to payments that are made without an end or maturity date. A perpetuity is classified as an annuity, which is something that earns a dividend or receives a payment at a regularly scheduled interval, generally yearly. So, how...
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Essentials Of Corporate Finance

ISBN: 9780073405131

6th Edition

Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan

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