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Question 28 0 l 1 Pts An investment broker is selling an asset that will generate a perpetual revenue stream such that next period's revenue
Question 28 0 l 1 Pts An investment broker is selling an asset that will generate a perpetual revenue stream such that next period's revenue will be $1,200. The asset will depreciate at 4% and the current real interest rate is 0.5%. From the prices show below, which is the highest price a rational investor would be willing to pay for this asset? $28,000 $20,000 nswer ' $26,000 $24,000 Present value of asset = 1200/ (0.04 + 0.005) = 26,666. A rational investor would be willing to pay any price below this value for the asset. Therefore the highest price that is below 26,666 in the answer choices is the right
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