23. A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a...

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23. A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and will be $1000. Each year after that, you will receive a payment on the anniversary of the last payment that is 8% larger than the last payment. This pattern of payments will go on forever. Assume that the interest rate is 12% 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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Fundamentals Of Corporate Finance

ISBN: 9781292018409

3rd Global Edition

Authors: Berk, Peter DeMarzo, Jarrad Harford

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