Question

Asked Nov 6, 2019

6 views

What is the present value of an investment that will pay $1,000 in one year's time, and $1,000 every year after that, when the interest rate is 8%?

Step 1

**Calculation of Present value of perpetuity:**

**Answer:**

The present value of the investment is **$12,500**

Step 2

Present value of perpetuity an annuity continuing forev...

Tagged in

Find answers to questions asked by student like you

Show more Q&A

Q: This is a continuation of the last problem I sent on Disney in number 3. I need help on problem 4. A...

A: If Disney borrows the investment amount and pays an additional interest of $5 million each year, its...

Q: Round Hammer is comparing two different capital structures: An all-equity plan (Plan I) and a levere...

A: a) Calculation of EPS:Thus, the EPS for Plan I and Plan II are $3.38 and $2.90 respectively.

Q: Chrome Co. borrows $1,665,000 at an interest rate of 7.32% APR monthly with equal monthly payments o...

A: PV of loan = $ 1,665,000; Annuity payment, A = 15,265;Period = 1 monthinterest rate per period, r = ...

Q: Can someone please just give me the right answer to the right decimal places for the last part, "How...

A: It is given that,Required accumulated amount is $860,000.Number of years is 11. So, total number of ...

Q: find the interst periodic deposit 4000 rate .055 time 40 years

A: Assumption:It is assumed that the periodic deposit of $4,000 is compounded annually at the rate of 5...

Q: Microhard has issued a bond with the following characteristics: Par: $1,000Time to maturity: 5 years...

A: Calculate the prices of the bond as follows:MS-Excel --> Formulas --> Financials --> PV

Q: Consider the following three bond quotes: a Treasury bond quoted at 103:17, a corporate bond quoted ...

A: Bonds are usually quoted as a percentage of its par value. Thus, to find the price of the bond follo...

Q: Computer A: Initial outlay=50,000, cash inflow=7,000 for 6 years Computer B: Initial outlay=35,000 ...

A: Hi, please note that the discount rate for each project is not mentioned in the question. So, we are...

Q: A couple plans to save for their child's college education. What principal must be deposited by the ...

A: Present value can be defined as the amount which is to be set aside in order to have a pre-defined s...