To pay for a new highway the local government sells a perpetuity that promises to pay $1

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To pay for a new highway the local government sells a perpetuity that promises to pay $1 000 a year from now until the end of time. If interest rates are 10%, what is the most that you would be willing to pay to get these future cash flows?

Related Book For answer-question

Advanced Financial Accounting

ISBN: 978-0137030385

6th edition

Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay

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Posted Date: Sep 10, 2023 07:23 AM

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To pay for a new highway the local government sells a perpetuity that promises to pay $1

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To calculate the present value of a perpetuity you can use the formula PV CFr Where PV ... View the full answer

Advanced Financial Accounting

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