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in order to receive an infinite payment stream as follow: = R is the annual payment and the first payment is received when the investment
in order to receive an infinite payment stream as follow:
=
- R is the annual payment and the first payment is received when the investment is made now. Future payments are discounted at an annual 2% rate. Suppose now the first payment is shifted and received one year from now, please calculate again the current investment which has to be made now.
- In addition, due to inflation, it is now suggested that R is increased by 1% each year, please calculate again the investment which has to be made now in (a).
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Principles of Macroeconomics
Authors: Karl E. Case, Ray C. Fair, Sharon E. Oster
12th edition
978-0134078809
