Question
A friend David who owns a perpetuity that promises to pay $15,000 at the end of each three year, comes to you and offers to
A friend David who owns a perpetuity that promises to pay $15,000 at the end of each three year, comes to you and offers to sell you all of the payments to be received after the 18th year for a price of $9,000. Assuming the interest rate is 12% annually. a) What is the market value for your friend perpetuity? b) Would you buy it? Why or Why not? c) What is the effective monthly rate for the above investment?
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Financial Modeling Using Excel And VBA
Authors: Chandan Sengupta
1st Edition
0471267686, 978-0471267683
