You have just signed off on a legal judgment that will pay you $5000 immediately, with this amount growing every year in perpetuity by 3 per year If your discount rate is 9 , what lump sum payment today would be economically equivalent to the growing perpetuity ...

This solution is slightly tricky Its helpful to remember one characteri ...

You have just signed off on a legal judgment that will pay you $5000 immediately, with this

Question:

You have just signed off on a legal judgment that will pay you $5000 immediately, with this amount growing every year in by 3% per year. If your is 9%, what lump-sum payment today would be economically equivalent to the growing Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... Perpetuity
Perpetuity refers to payments that are made without an end or maturity date. A perpetuity is classified as an annuity, which is something that earns a dividend or receives a payment at a regularly scheduled interval, generally yearly. So, how...