Jason buys a consol (perpetual bond) that pays a fixed cash flow of $750,000 each year, forever,

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

Question:

Jason buys a consol (perpetual bond) that pays a fixed cash flow of $750,000 each year, forever, starting at the end of this year. If the current market rate is 12.5%, what is the PV of the cash flows?

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: Jun 09, 2023 08:00 AM

See More Questions

Solve the following crossword. (Round your final answers to the nearest dollar, but do not round intermediate calculations.) ACROSS 1. A rich uncle has promised to pay you $3,160 a year for the next...
What is the NPV for the following project cash flows at a discount rate of 15%? C0=-1,000, C1=700, C2=700 SOB Floor Company has a risk premium of 21% and a beta of 3. If the risk free rate is 3%,...
This case study on project evaluation is applicable for beginning courses in corporate finance or finance strategy. Two alternative investment options are available to evaluate. Challenges are...
If I have a lump sum of $28,621 today, calculate the value of that lump sum 29 years in the future assuming earn 2.50% compounded annually on my investment?
Suppose an = 3 and sn is the nth partial sum of the series. What is lim n an? What is lim n sn?
Find the maximum coefficient of performance for the refrigerator in your kitchen, assuming it runs in a Carnot cycle.
A Gallup poll taken in May 2016 asked 1025 adult Americans to state their opinion on the availability of abortions. The following table presents the results, along with the proportions of people who...
Consider the hypothetical population below, with population values: a. Find the values of the population quantities tx, ty, Sx, Sy, R, and B. b. Construct a table like that in Table 4.2, giving the...
Staley Inc. reported the following data: Net income $238,600 Depreciation expense 56,300 Loss on disposal of equipment 20,100 Increase in accounts receivable 12,900 Increase in accounts payable...
A commercial real estate investment fund must report its quarterly investment performance to investors. A summary of its (1) beginning and end-of-quarter assets and equity and (2) cash inflows and...
LightsON (Pty) Ltd makes LED Lightbulbs. The entity has a dual accounting reporting system, whereby it uses variable costing for internal management reporting purposes and absorption costing (based...
Avocational crimes refer to criminal activities that are not committed by individuals as a part of their profession or occupation, but rather as a secondary or sideline activity, often for personal...
In the context of absorptive separation processes, how does the introduction of reactive absorption (e.g., using chemical reactants) alter the absorption equilibrium and kinetics? What are some...
Identify the reasons for disclosure below as they are (OR) are not for public interest or benefit. Options 1. Not for public interest or benefit 2. Not for public interest or benefit 3. For public...
How do advanced computational fluid dynamics (CFD) simulations contribute to the design and optimization of absorption equipment, particularly in assessing flow distribution and predicting...
1)The Momentum Consulting LLC, has the following manufacturing costs on a per-unit basis when it manufacturers 8,000 units:: Manufacturing Costs: Direct Materials $15 Direct Labor $8 Variable...
On March 4, 2020 at a rally to protect abortion access, Senate Majority Leader Chuck Schumer protested at the U.S. Supreme Court. Could Senator Schumer be charged under federal statutes relating to...
Gopher, Inc. developing its upcoming budgeted Costs of Quality (COQ) with the following information: Expense Item Budget Raw Materials Inspection $ 15,000 EPA Fine 200,000 Design Engineering 15,000...
A project that costs $3,000 to install will provide annual cash flows of $800 for each of the next 6 years. What is NPV if the discount rate is 10%? Is this project worth pursuing? How high can the...
How can a small, private firm finance its capital investments? Give two or three examples of financing sources.
You can buy a car that is advertised for $24,000 on the following terms: (a) Pay $24,000 and receive a $2,000 rebate from the manufacturer; (b) Pay $500 a month for 4 years for total payments of...
The load resistor in the NMOS inverter in Figure $16.3(\mathrm{a})$ is $R_{D}=40 \mathrm{k} \Omega$. The circuit is biased at $V_{D D}=3.3 \mathrm{~V}$. (a) Design the transistor...
The inverter circuit in Figure 16.3 (a) is biased at $V_{D D}=3.3 \mathrm{~V}$. Assume the transistor conduction parameter is $K_{n}=50 \mu \mathrm{A} / \mathrm{V}^{2}$. (a) Let \(R_{D}=100...
(a) Redesign the resistive load inverter in Figure 16.3 (a) so that the maximum power dissipation is $0.25 \mathrm{~mW}$ with $V_{D D}=3.3 \mathrm{~V}$ and $v_{O}=0.15 \mathrm{~V}$ when the...

Jason buys a consol (perpetual bond) that pays a fixed cash flow of $750,000 each year, forever,

Question:

Expert Answer:

Answer Solution i Present value ... View the full answer

Fundamentals of Corporate Finance

Students also viewed these finance questions