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An investment makes annual payments. The first payment of $250 is due to be paid exactly one year from today at t=1. Payments are
An investment makes annual payments. The first payment of $250 is due to be paid exactly one year from today at t=1. Payments are then expected to grow in size at a rate of 19.0% annually until t=24. Payments are then expected to remain stable at that size until t=35. After t=35, payments will then grow at a rate of 2.0% annually for the foreseeable future (i.e. the payment at t-36 is 2.0% bigger than the payment at t=35). A) What is the magnitude of the cash flow that is paid by the investment at t=36? The size of the cash flow paid at t=36 is expected to be $ (Round your answer to the nearest cent) B) What is the maximum price that an investor should be willing to pay today (i.e. at t=0) for this investment given the above information about its cash flows? Assume that the appropriate discount rate for these cash flows is 11.0% per annum compounded annually. $ is the maximum price today that an investor should pay for this investment's cash flows given an annual discount rate of 11.0%. (Round your answer to the nearest cent) MacBook Air F An investment makes annual payments. The first payment of $250 is due to be paid exactly one year from today at t=1. Payments are then expected to grow in size at a rate of 19.0% annually until t=24. Payments are then expected to remain stable at that size until t=35. After t=35, payments will then grow at a rate of 2.0% annually for the foreseeable future (i.e. the payment at t=36 is 2.0% bigger than the payment at t=35). A) What is the magnitude of the cash flow that is paid by the investment at t=36? The size of the cash flow paid at t=36 is expected to be $ (Round your answer to the nearest cent) B) What is the maximum price that an investor should be willing to pay today (i.e. at t=0) for this investment given the above information about its cash flows? Assume that the appropriate discount rate for these cash flows is 11.0% per annum compounded annually. $ is the maximum price today that an investor should pay for this investment's cash flows given an annual discount rate of 11.0%. (Round your answer to the nearest cent) MacBook Air F
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