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(30 min)* Time Value of Money. Fibonacci series. Consider a modified Fibonacci series 1, 2, 3, 5, 8 ... , defined as: Fibonacci (1) =
- (30 min)* Time Value of Money. Fibonacci series. Consider a modified Fibonacci series 1, 2, 3, 5, 8 ... , defined as: Fibonacci (1) = 1, Fibonacci (2) = 2, Fibonacci (n) = Fibonacci (n-1) + Fibonacci (n-2) for n N. Consider a perpetual cash flow stream where Fibonacci (n) dollars are received at the end of year n, with the first payment at the end of year one.
- (10 min) At which discount rates has this perpetuity a finite present value?
- (10 min) What is the present value of the perpetuity if the discount rate is 100% p.a.?
- (10 min) Show the PV of this perpetuity for discount rates 70%, 80%, 90%, 100%, 110%, 120% and 130%.
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