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You buy a perpetual bond (perpetuity) and the first payment will be $10,000 which you will receive 5 years after purchase. After the first payment,
You buy a perpetual bond (perpetuity) and the first payment will be $10,000 which you will receive 5 years after purchase. After the first payment, the payments will grow by 1.2% every year. Your opportunity cost of capital when buying the bond is 10.6%, what is the present value of the bond at the time of purchase?
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