Question: Perpetuity Just write problem #1, the given, required and the complete solution make it sure you put a word explaning the final answer . PROBLEM

Perpetuity

Just write problem #1, the given, required and the complete solution make it sure you put a word explaning the final answer .

PROBLEM #1: Assuming that Donald holds a perpetual bond that generates an annual payment of P 2, 000,000.00 each year. He believes that the borrower is creditworthy and that an 8% interest rate will be suitable for this bond. Compute the PV for this perpetuity.

PROBLEM #2: Jacob, a businessman, invested in a company that will pay him a dividend of P75,200.00 per share annually. He expects a 7.75% growth rate in the annual payments. Given the possible risks, Jacob expects a valuation of a 16% discount rate. Calculate the value of a share under the above assumptions.

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