Suppose that today is January 1, 2003. A perpetuity makes annual payments, the first coming on...
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Suppose that today is January 1, 2003. A perpetuity makes annual payments, the first coming on January 1, 2009. The first payment is for 6220 dollars, and each payment up to (and including) the one on January 1, 2032 is 4.5 percent larger than the previous payment. After that, the payments increase by 500 dollars annually. What is the present value of the perpetuity today, assuming an effective rate of 7.6 percent? Answer = dollars. Suppose that today is January 1, 2003. A perpetuity makes annual payments, the first coming on January 1, 2009. The first payment is for 6220 dollars, and each payment up to (and including) the one on January 1, 2032 is 4.5 percent larger than the previous payment. After that, the payments increase by 500 dollars annually. What is the present value of the perpetuity today, assuming an effective rate of 7.6 percent? Answer = dollars.
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To calculate the present value of the perpetuity we need to find the present value of all the future payments and then sum them up Lets first determine the pattern of payments The first payment is mad... View the full answer
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