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You are evaluating a growing perpetuity product from a large financial services firm. The product promises an initial payment of $20,000 at the end of

You are evaluating a growing perpetuity product from a large financial services firm. The product promises an initial payment of $20,000 at the end of this year and subsequent payments that will thereafter grow at a rate of 0.02 annually. If you use a discount rate of 0.09 for investment products, what is the present value of this growing perpetuity?

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Fundamentals of Financial Management

Fundamentals of Financial Management

Authors: Eugene F. Brigham

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