Today is Dec. 31, 2050. You are considering a financial claim that promises to pay $100 in one year from today. It will make the same payment at the end of each year indefinitely. Assume  that the discount rate is 10%. Determine the price of this financial claim.




b) Suppose there is another type of financial claim with a slightly different payment scenario you  are considering. It will pay $80 for next three years, starting from Dec. 31 2051 and then is  expected to pay $100 from Dec. 31 2054 forever thereafter. The same discount rate applies.  Find the price of this financial claim. 

Answer rating: 100% (QA)

To determine the price of the financial claim in each scenario we need to calculate the present ... View the full answer