1.the formulas for the present value of a perpetuity (aka: no-growth perpetuity) and the present value of...
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Question:
1.the formulas for the present value of a perpetuity (aka: no-growth perpetuity) and the present value of an ordinary annuity (aka: finite series of cash flows):
(I)
(II)
Withand.We know thatconverges toas n approaches.Create a numerical example to show that this is so and explain the relevance of this convergence with respect to the estimation of income property valuation.
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