A constant perpetuity with cash flow, C, will have the first cash flow occur exactly 17 years from now. Each subsequent cash flow will be exactly 7 years after the prior cash flow. You have used the formula, PV=C/r (correctly) to determine a value. The determined value needs to be discounted exactly how many years to get the PV today of the cash flows? The determined value needs to be discounted exactly years to get the PV today of the cash flows.
A constant perpetuity with cash flow, C, will have the first cash flow occur exactly 17 years from now. Each subsequent cash flow will be exactly 7 years after the prior cash flow. You have used the formula, PV=C/r (correctly) to determine a value. The determined value needs to be discounted exactly how many years to get the PV today of the cash flows? The determined value needs to be discounted exactly years to get the PV today of the cash flows.
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....
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