Use the Gordon growth model and Suppose the payment for a perpetual income stream grows over time
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Question:
Use the Gordon growth model and Suppose the payment for a perpetual income stream grows over time at a constant rate, g. Assume that g < i. The present value (PV) of this income stream is represented as:
PV = $Z × (1 + i – g).
PV = $Z × (i – g).
PV = $Z/(1 + i + g).
PV = $Z/ci – g.
Related Book For
Managerial Economics Theory Applications and Cases
ISBN: 978-0393912777
8th edition
Authors: Bruce Allen, Keith Weigelt, Neil A. Doherty, Edwin Mansfield
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