Consider an investment that pays $17.17 every year forever. This firm does not intend to grow and

Fantastic news! We've Found the answer you've been seeking!

Question:

Consider an investment that pays $17.17 every year forever. This firm does not intend to grow and has an interest rate (required rate of return) of 8%. What is the present value of this investment opportunity? Give answers to two decimals.

Related Book For answer-question

Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

See More Books

Posted Date: Feb 26, 2024 07:05 AM

See More Questions

For each problem, show your work steps. A correct answer with no work shown gets half credit (which means you fail the assignment). An incorrect answer with no work receives 0 credit. With time value...
Last Sale Net Bid Ask Open Int Puts Last Sale Net bid Ask Vol Open Int 16Aug 155.00(1619H155-E) 6.45 0.75 6.95 7.25 9 16Aug 155.00(1619T155-E) 1.18 (0.75) 1.17 1.25 61 4505 16Aug 166.00(1619H160-E)...
13. What is a lower bound for the price of 3-month call option on a non- dividend-paying stock when the stock price is $50, the strike price is $45, and the 3-month risk-free interest rate is 8%?...
develop a trial balance, complete with an appropriate three-line heading 1. Bought office equipment from Peckoff Equipment Co. on 30-day credit terms, $1,390. Purchase Invoice #2071. Ledger Entries:...
What ethical standards for human resource management do you think a company should require from all its operations worldwide? In what areas of HRM, if any, should ethical standards be relaxed to...
Describe what is meant by a database. What functions do databases perform?
Discuss the pros and cons of using social networks to recruit top talent.
Park Company purchased 90% of the stock of Salt Company on January 1, 2009, for $465,000, an amount equal to $15,000 in excess of the book value of equity acquired. This excess payment relates to an...
1. (2 points) Create a database called: University Town 2. (4 points) Create 4 tables called: a) Students b) Professors c) Courses d) Fees 3. (2 points) Insert 10 records in each table. 4. (4 points)...
QUESTION 2: a) Find the general solution of the equation dy dy dr + 4y = 4 - e- dr by using the method of undetermined coefficients. b) A vibrating spring with damping can be modelled by the...
An object moves with constant velocity. What can you say about the work done on a system that includes only this object? $\cdot$$\cdot$
What is the average power delivered when you raise a $2-\mathrm{kg}$ object by $50 \mathrm{~cm}$ in $50 \mathrm{~ms}$ ?
Ferreri Company received the following selected information from its pension plan trustee concerning the operation of the companys defined benefit pension plan for the year ended December 31, 2015....
Identify conditions under which the duty to pay child support commonly terminates. Under what kinds of circumstances might the duty of support continue?
BlackBerry Ltd. has a target current ratio of 2.0 but has experienced some difficulties financing its expanding sales in the past few months. At present, the firm has current assets of $750,000 and a...
Chemical reactions that involve the changing of atomic nuclei are defined as nuclear reactions. Research a form of nuclear energy man-made or in nature. should include: a brief background on your...
Why did management adopt the new plan even though it provides a smaller expected number of exposures than the original plan recommended by the original linear programming model?
You plan to retire in 30 years and want to accumulate enough by then to provide yourself with $30,000 a year for 15 years. a. If the interest rate is 10%, how much must you accumulate by the time you...
You may have heard big business criticized for focusing on short-term performance at the expense of long-term results. Explain why a firm that strives to maximize stock price should be less subject...
Growth Enterprises believes its latest project, which will cost $80,000 to install, will generate a perpetual growing stream of cash flows. Cash flow at the end of the first year will be $5,000, and...
By using the yield to maturity on AT&Ts debt, we found that its pretax cost of debt is 3.65%. If AT&Ts tax rate is 25%, what is its effective cost of debt?
You work in Walt Disney Companys corporate finance and treasury department and have been assigned to the team estimating Disneys WACC. You must estimate this WACC in preparation for a team meeting...
You are working for Microsoft evaluating the possibility of selling energy drinks. Microsofts WACC is 8.1%. Energy drinks would be a new line of business for Microsoft, however, so the systematic...

Consider an investment that pays $17.17 every year forever. This firm does not intend to grow and

Question:

Expert Answer:

The formula to calculate the present value of a perpetuity is Present V... View the full answer

Fundamentals of Corporate Finance

Students also viewed these finance questions