3. 4. The Doug and Bob Corporation is selling a perpetual annuity contract that pays $30,000...
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3. 4. The Doug and Bob Corporation is selling a perpetual annuity contract that pays $30,000 per year. The contract currently states the annuity will start payments in year 10. If the going rate of return on this investment is 10%, what should we be willing to pay for the perpetual annuity today (approximately)? $139,952 $105,148 $115,663 $127,229** $300,000 c) You want to receive quarterly payments of $3000, beginning at the end of this quarter. You want to receive payments for 25 years and the cost of the annuity is $100,000. What is the APR on this investment (approximately)? a) b) e) 2.81% 6.73% 11.25%** 2.62% 10.49% 3. 4. The Doug and Bob Corporation is selling a perpetual annuity contract that pays $30,000 per year. The contract currently states the annuity will start payments in year 10. If the going rate of return on this investment is 10%, what should we be willing to pay for the perpetual annuity today (approximately)? $139,952 $105,148 $115,663 $127,229** $300,000 c) You want to receive quarterly payments of $3000, beginning at the end of this quarter. You want to receive payments for 25 years and the cost of the annuity is $100,000. What is the APR on this investment (approximately)? a) b) e) 2.81% 6.73% 11.25%** 2.62% 10.49%
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The detailed answer for the above question is provided below Problem 3 Solution To find the present value of the perpetual annuity we can use the form... View the full answer
Related Book For
Essentials of Corporate Finance
ISBN: 978-1259277214
9th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
Posted Date:
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