Tobi owns a perpetuity that will pay $1,500 a year, starting on year from now. He offers to sell you all of the remaining payments after the next 25 payments have been paid. what price should you offer him for payments 26 onward if you desire a rate of return of 8%? What does your offer price illustrate about the value of perpetuites?
Tobi owns a perpetuity that will pay $1,500 a year, starting on year from now. He offers to sell you all of the remaining payments after the next 25 payments have been paid. what price should you offer him for payments 26 onward if you desire a rate of return of 8%? What does your offer price illustrate about the value of perpetuites?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 6P
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Tobi owns a perpetuity that will pay $1,500 a year, starting on year from now. He offers to sell you all of the remaining payments after the next 25 payments have been paid. what price should you offer him for payments 26 onward if you desire a
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