1. (a) Suppose you are given a perpetuity of $40,500 received from the British CONSOL you hold....
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1. (a) Suppose you are given a perpetuity of $40,500 received from the British CONSOL you hold. Assume that the interest rate achievable in the financial market is 11.5%. What is the PV of your perpetuity?
(b) Do you think your perpetuity PV will be different next year? Whether YES or NO, why?
2. Suppose a retiree is entitled to his annual pension of $30,000 for 25 years from retirement date. If the clause of the payments states that the pension is going to be decreasing by 1% a year throughout the period, and interest rate is 13%, what is the present value of this retiree's total periodic pension benefit payment?
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
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