FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

An investment makes constant annual payments for the next 25 years of $890 with the first payment due at t=1. After this period, payments grow

  1. An investment makes constant annual payments for the next 25 years of $890 with the first payment due at t=1. After this period, payments grow at a rate of 2% annually and are paid in perpetuity. What is the present value of the investment's cash flows at an annual discount rate of 8.0%?

Answer: $11,710

I have no idea how to calculate this one?

Pls give me correct explanation how to calculate

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Business Mathematics with Canadian Applications

Contemporary Business Mathematics with Canadian Applications

Authors: S. A. Hummelbrunner, Kelly Halliday, Ali R. Hassanlou, K. Suzanne Coombs

11th edition

134141083, 978-0134141084

More Books

Students also viewed these Finance questions

Question

★★★★★
Relate Web 2.0 to knowledge management.

Answered: 1 week ago

Question

★★★★★
Accounting records for Jim's Shopping Bags yield the following data for the year ended December 31, 2008. Requirements 1. Journalize Jim's inventory transactions in the perpetual system. 2. Report...

Answered: 1 week ago

Question

★★★★★
What does it mean when the explanatory variables are collinear?

Answered: 1 week ago

Question

★★★★★
Two projects have the following expected net present values and standard deviations of net present values: a. Using the standard deviation criterion, which project is riskier? b. Using the...

Answered: 1 week ago

Question

★★★★★
Peter-Pan Itd manufactures a range of products used in the building industry. Manufacturing is undertaken using one of two processes: the Alpha Process and the Omega Process. All products are...

Answered: 1 week ago

Question

★★★★★
Samuel maintains a full set of accounting records including a three column cash book. He provided the following information for October 205. Oct 1 Cash $110, bank $5,150 (debit) Trade receivables ...

Answered: 1 week ago

Question

★★★★★
Problem: Report Er Consider the vectors u and V in the grid generated by x and y: The vectors x1 y, u are linearly dependent, which means that there exist scalars u.' b. P that are not all I] such...

Answered: 1 week ago

Question

★★★★★
Jack and Jill need to save $8600 toward a new car. How long willit take them if they save $280 a month earning an annual interestof 6.7% (compounded monthly)? (Treat as an ordinary annuity.)(State 1...

Answered: 1 week ago

Question

★★★★★
a) Derive the midpoint average equation fn-1 + fn+1 2 from the Taylor series expansion of fn-1 and fn+1 centered at fn- b) What is the accuracy of this approximation? Justify.

Answered: 1 week ago

Question

★★★★★
An ad for Hydroxycut, a dietary supplement sold as a weight loss aid, depicts a handsome man with an open shirt with ripped abdominal muscles who claims that he "was shocked at how fast Hydroxycut...

Answered: 1 week ago

Question

★★★★★
DO not use for or while. Any looping must be accomplished using recursion. Part 3a. Largest power of two less than Implement the method public static int lp2lt(int n) which calculates and returns the...

Answered: 1 week ago

Question

★★★★★
1. Mate Library is going through a tough time. It is very expensive to keep a librarian, so for the last 5 years, the library has been operating without him. Readers come, take the books and go. But...

Answered: 1 week ago

Question

★★★★★
Write a calculator program that prompts the user to enter two numbers, then the program asks the user whether to add (option #1), subtract (2), or multiply (3) the two numbers. The program should...

Answered: 1 week ago

Question

★★★★★
A The following figures for the year to 30 April 2012 have been extracted from the books and records of three companies which form a group: Revenue reserves at 1 May 2011 Inventory at 1 May 2011...

Answered: 1 week ago

Question

★★★★★
You are presented with the following summarised information for Norbreck pic and its subsidiary, Bispham Ltd: Income Statements for the year ending 30 September 2013 Norbreck plc Bispham Ltd 000 000...

Answered: 1 week ago

Question

★★★★★
A The following are the trial balances of ATH Ltd, GLE Ltd, and FRN Ltd as at 31 December 2014. \begin{tabular}{|c|c|c|c|} \hline \multirow[b]{3}{*}{ oll } & ATH Ltd & GLE Ltd & FRN Ltd \\ \hline &...

Answered: 1 week ago

Previous Question Next Question