A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year
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A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and will be $3000. Each year after that, you will receive a payment on the anniversary of the last payment that is 3% larger than the last payment. This pattern of payments will go on forever. Assume that the interest rate is 13% per year.
a. What is today’s value of the bequest?
b. What is the value of the bequest immediately after the first payment is made?
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Analyzing the Bequest a Todays Value Present Value Since this is a growing perpetuity we can use the ...View the full answer
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Related Book For 
Fundamentals Of Corporate Finance
ISBN: 9781292437156
5th Global Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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