Question
Jed is considering the purchase of a unit investment trust (UIT) with a three-year life. The UIT promises a payment of $5,000 next year and
Jed is considering the purchase of a unit investment trust (UIT) with a three-year life. The UIT promises a payment of $5,000 next year and the payments are expected to grow at 8% per year for the subsequent two years. If Jeds required return on the investment is 9.5%, what should he be willing to pay for the UIT? The answer is below but I dont know how to come to this answer.
Answer: $13,511.83
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Financial Mathematics
Authors: Cacildo Marques
1st Edition
8741574710, 979-8741574713
