If you pay the bank $500 each year for the next 12 years, after that the bank
Fantastic news! We've Found the answer you've been seeking!
Question:
If you pay the bank $500 each year for the next 12 years, after that the bank will pay you $500 each year forever. The interest rate is 7%, answer the following:
1. At the end of 12 years, what is the value of the payments you made to the bank?
2. At the end of 12 years, what is the value you get from the bank?
3. explain why this is or is not a good deal
4. what is the lowest perpetuity payment that makes this a good deal?
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
Posted Date: