Suppose you have a perpetuity worth $100,000 it is an infinite stream of $5,000 annual payments
Fantastic news! We've Found the answer you've been seeking!
Question:
Suppose you have a perpetuity worth $100,000 – it is an infinite stream of $5,000 annual payments discounted at 5%. At the end of 10 years, and you have collected $50,000 (10 years X $5,000), you decide to sell the annuity. Assuming it still promises an infinite stream of $5,000 annual payments and the appropriate interest rate is still 5%, what would be the price? Does this make sense?
Related Book For
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
Posted Date: