You have just signed off on a legal judgment that will pay you $10,000 immediately, with this amount growing every year in perpetuity by 4% per year. If your discount rate is 12%, what lump-sum payment today would be economically equivalent to the growing perpetuity?
Answer to relevant QuestionsWas IBM's stock price reaction to their October 2012 earnings announcement efficient? Explain your reasoning. Describe Keynes' view of how people form their expectations regarding future events. What type of cognitive error identified by behavioral finance corresponds to Keynes' observations? A firm paid dividends in time periods −4 to 0 (4 years ago through today, spanning 4 periods) of $1.00, $1.08, $1.21, $1.34 and $1.45. What was the average annual compound rate of dividend growth over this period? You have won a contest. Your prize consists of 8 payments of $5,000 made at the end of years 3-10 (assume that "right now" equals time zero), or a one-time lump-sum cash payment made at time zero. You have a 10% discount ...If you save $4800 a year into a 401(k) retirement plan (with deposits made in 12 equal monthly installments) for the next 15 years and earn an average rate of interest of 7% per year, how much will you have at the end of the ...
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