Question
QUESTION 1: PART (a) Suppose that the constant and perpetual cash flow is $1,000 and the discount rate is 8%. What is the value of
QUESTION 1:
PART (a)
Suppose that the constant and perpetual cash flow is $1,000 and the discount rate is 8%. What is the value of this perpetuity?
PART (b)
Suppose that the constant and perpetual cash flow is $1,000 and the discount rate is 10%. What is the value of this perpetuity?
PART (c)
5-year bond with a coupon rate of 4% has a face value of $1000. What is the annual interest payment?
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Public Finance
Authors: Harvey S Rosen, Ted Gayer
9th International Edition
0071267883, 9780071267885
