An asset with price S at time 0 pays some cashflows. Perpetual cashflows worth Ca are...

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An asset with price S at time 0 pays some cashflows. Perpetual cashflows worth Ca are paid every odd years (1, 3, 5,....). In addition, perpetual cashflows worth C, are paid every even years (2, 4, 6,...). Provide a formula for the asset price S by assuming that the (annualized) discount rate is r. An asset with price S at time 0 pays some cashflows. Perpetual cashflows worth Ca are paid every odd years (1, 3, 5,....). In addition, perpetual cashflows worth C, are paid every even years (2, 4, 6,...). Provide a formula for the asset price S by assuming that the (annualized) discount rate is r.

Answer rating: 100% (QA)

To calculate the price of the asset with cashflows as described we can use the concept of a ... View the full answer