Consider a growing perpetuity that will pay $100 in one year.  Each year after that, you will receive a payment on the anniversary of the last payment that is 6% larger than the last payment.  This pattern of payments will continue forever.  If the interest rate is 11%,  the value of this perpetuity is:

Q: Consider an investment which pays $2,000 at the end of year 1, year 2, and year 3. In year 4, the…

A: Terminal value at end of year 3 = Cash flow in year 4  / (Interest rate - growth rate) = $5000 / (7%…

Q: Use the following information to answer the question below.   Nielson Motors is considering an…

A:

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A: Formula:

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A: Total value = $1.2 million Rate of interest = 10% Present value = $400000

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A: maximum amount investment is present value annual payment.

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A: Given, Value of Investment today = $1,080            Investment today and will pay two years from…

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A:

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A: Net present value is a discounted cash flow (DCF) method used for evaluating investment proposals.…

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A: Value of perpetuity is present value of cash flow for perpetuity.

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A: Principal amount invested now will become certain amount after certain period of time at specific…

Types of Insurance Contract

Insurance is a contract wherein an individual or entity gets financial protection from the insurance company for any damages or losses incurred. The individual or entity is called the insured, whereas the insurance company is called the insurer. The insured and the insurer enter a legal contract for a fixed term called the insurance term, and the contract is called an insurance policy.