x v O Home-. Students V 4-) MyFinanceab Aa Assign ?? @ Do Homework , Wendy . x V
ID: 2614473 • Letter: X
Question
x v O Home-. Students V 4-) MyFinanceab Aa Assign ?? @ Do Homework , Wendy . x Va A-Z Databases: mergent CSecure https//www Apps sHuSouthern New HamNiew TabUnited Stanes Postal When To Sell A Mut homeworkid-481449221questionld- 38flushed-fase8ld 4992748&back; FIN-320-05132 Principles of Finance 18EW5 Wendy Franey&1 6/13/18 3:05 PM Homework: 6-1 MyFinanceLab Assignment Score: 0 of 5 pts P6-44 (similar to) 11 of 12 (8 compiete) Hw Score: 24%, 12 of 50 pts Questor, Help Related to Checkpoint 6.5) (Present value of a growing perpetuity) What is the present value of a perpetual stream of cash lows that pays $1,500 at the and of year one and the annual cash flows grow at a tat" of 2% per year indefrnek if the appropriate discount tate is es? what te oprane discount 'ate-6%? ? tho appropriate discount rate is 8% the present value oné growing perpeuay is t[] Round to th* nearest cent) a. your anguer in the answer box and then cick Check AnsweExplanation / Answer
Answer a.
Expected Payment = $1,500
Growth Rate = 2%
Discount Rate = 8%
Present Value of Perpetuity = Expected Payment / (Discount Rate - Growth Rate)
Present Value of Perpetuity = $1,500 / (0.08 - 0.02)
Present Value of Perpetuity = $25,000
Answer b.
Expected Payment = $1,500
Growth Rate = 2%
Discount Rate = 6%
Present Value of Perpetuity = Expected Payment / (Discount Rate - Growth Rate)
Present Value of Perpetuity = $1,500 / (0.06 - 0.02)
Present Value of Perpetuity = $37,500
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.