Question
Western regional bank is selling a perpetuity that pays equal payments of $X every semiannual period with the first payment in one semiannual period
Western regional bank is selling a perpetuity that pays equal payments of $X every semiannual period with the first payment in one semiannual period from today. They will accept payment for the perpetuity in 3 incremental payments: 1,874 in 3 years, 5,738 in 6 years and 6,101 in 12 years. How much will the perpetuity pay each semiannual period (what is X)? Assume the interest rate is 12% compounded semiannually.
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
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