Question
1. Suppose that one year from now you receive $450. At the end of the next nine years you receive a payment that is 2%
1. Suppose that one year from now you receive $450. At the end of the next nine years you receive a payment that is 2% larger than the prior year. If the cost of capital is 11% what is this stream of cash flows worth today?
2. Suppose that one year from now you will receive $400 and that at the end of every year thereafter you will receive a payment that is 1% larger than the prior payment. If the cost of capital is 12% what is this stream of cash flows worth today?
3. Suppose that one year from now you will receive $400. At the end of each of the next four years you will receive a payment that is 3% bigger than the prior payment. Following year five you will receive a payment at the end of every year that is 1% larger than the prior payment. If the cost of capital is 7% what is the this stream of cash flows worth today?
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