Question
A record company bought the rights to an artist's music catalogue and they expect to receive royalty payments of $45,000 per year forever (a perpetuity).
A record company bought the rights to an artist's music catalogue and they expect to receive royalty payments of $45,000 per year forever (a perpetuity). What is this cash flow worth? Assume interest rates are 7%.
A. $ 650,286
B. $ 1,127,286
C. $ 58,714
D. $ 642,857
E. The value is infinite.
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Investment Analysis and Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown
10th Edition
978-0538482387
