Alyson, another investor, has also purchased an IIP for the original price of $846.41388758885. Two years pass, and Alyson has just received the annual payment of $36. She is considering selling the IIP.

Again, the original information regarding IIP's has been repeated below.

• Customers pay $846.41388758885 to buy an IIP.
• The IIP will pay out $36 at the end of each year for 12 years
• The IIP will pay out a further single payment of $1,000 after 12 years
• There are no further payments after this single payment at time 12.

(a) Barney is willing to purchase the IIP from Alyson. He requires a return of 3.05% p.a. effective. What is the maximum price Barney is willing to pay? Give your answer in dollars, to the nearest cent.

Answer rating: 100% (QA)

Alyson is willing to sell her IIP for 84641388758885 Barney another inves... View the full answer