Determine the value of a compound growing annuity. The annuity pays $100 in the first year...
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Determine the value of a compound growing annuity. The annuity pays $100 in the first year and then cash flows grow at X% per year for 20 years. For the second 20 years, the cash flows grow by Y% per year (40 years total). Note that the cash flow in year 21 should be X% bigger than the prior cash flow, and the cash flow in year 22 should be Y% bigger than the prior cash flow. Based on inputs X and Y, what is the value of the compound annuity? Assume a discount rate of 9%. Determine the value of a compound growing annuity. The annuity pays $100 in the first year and then cash flows grow at X% per year for 20 years. For the second 20 years, the cash flows grow by Y% per year (40 years total). Note that the cash flow in year 21 should be X% bigger than the prior cash flow, and the cash flow in year 22 should be Y% bigger than the prior cash flow. Based on inputs X and Y, what is the value of the compound annuity? Assume a discount rate of 9%.
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To calculate the present value of the compound growing annuity we can use the formula for the ... View the full answer
Related Book For
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
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