You have a chance to purchase a perpetual security that has a stated annual payment (cash flow) of $50 However, this is an unusual security in that the payment will increase at an annual rate of 5 per year this increase is designed to help you keep up with inflation The next payment to be received (your first payment, due in 1 year) will be $5250 If your required rate of return is 15, how much should you be willing to pay for this security?

Answer rating: 100% (QA)

First Payment of the perpe... View the full answer