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8,9,10 8. I am thinking of buying a perpetuity that pays out $100 per month forever. The payments begin 5 years from today. What is
8,9,10
8. I am thinking of buying a perpetuity that pays out $100 per month forever. The payments begin 5 years from today. What is the present value of this perpetuity discounting at an annual rate of 11%? 9. In the previous problem, suppose the first payment is $100 and that the payments increase at an annual rate of 5% thereafter. What is the present value of the perpetuity (use a discount rate of 11%). 10. Suppose that I buy an annuity that makes payments of $100 per month beginning 5 years 5 from today and continuing for ten years after that (a total of 120 payments). What is the present value of the annuity (use a discount rate of 11%)Step by Step Solution
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