Mark true that you understand the importance of working through these problems Chapter 5 Annuities IN PMT.docx True O False QUESTION 4 Exploring Perpetuities It might seem strange to evaluate a stream of cash flows that goes on forever. We learn about perpetuities in Chapter 5 because we will use this tool to value stock. Publicly traded companies can seemingly five forever (or what feels like forever). In this chapter, let's start with a basic perpetuity. These problems will provide an interest rate and a cash flow and will indicate that it goes on forever, or to infinity See Section 5-11 of the book and Chapter 5 Part 2 video sarting at minute 20 Answer the following What's the present value of a perpetuity that pays $402 per year with the first cash flow occuring at the end of year 1, if the appropriate interest rate is 3.82% Include your answer to two decimals Pay attention that the interest rate is a decimal because it is being used in a formula Pay attention that the present value is determined one period before the first cash flow is received QUESTIONS We will follow-up the basic perpetuity with a delayed perpetuity. Watch the Chapter 5 Part 2 video for an example of a delayed perpetuity Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save Al Answ ET