Question
An investment promises a return of $10,000 per year for 10 years, with the first payment occurring a year from now. If your required return
An investment promises a return of $10,000 per year for 10 years, with the first payment occurring a year from now. If your required return is 10% a year, what should the price of the investment be today? What should the price be if the payments occurred for 40 years? What if the payments occurred forever (in perpetuity)?
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Options Futures and Other Derivatives
Authors: John C. Hull
10th edition
013447208X, 978-0134472089
