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Investment banking interviews

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Two questions that could come up in investment banking interviews.

Q1: What's the NPV of $1 with a 10% discount rate over 10 years?

Q2: You receive a dollar for the rest of your life? What's the value of those dollars today?

My idea:

Q1: NPV= 1/(1+0.1)^1 + 1/(1+0.1)^2 + 1/(1+0.1)^3 ... until ^10 . But is there a shortcut?

Q2: 1/cost of equity because it's a perpetuity so in our environment c. 1/0.08 ? Or do we need to take into account that we have a definitive life?

Reference no: EM133116364

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