Question
Suppose you have a perpetuity worth $100,000 it is an infinite stream of $5,000 annual payments discounted at 5%. At the end of 10
Suppose you have a perpetuity worth $100,000 – it is an infinite stream of $5,000 annual payments discounted at 5%. At the end of 10 years, and you have collected $50,000 (10 years X $5,000), you decide to sell the annuity. Assuming it still promises an infinite stream of $5,000 annual payments and the appropriate interest rate is still 5%, what would be the price? Does this make sense?
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The perpetuitys current worth is 100000 The price of the perpetui...
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
15th edition
77861612, 1259194078, 978-0077861612, 978-1259194078
