Perpetual cash flow stream

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Question 1. Alphonse wants to receive $25 000 in perpetuity and will invest his money in an investment that will earn a return of 13.5 per cent annually. What is the value of the investment that he needs to make today to receive his perpetual cash flow stream?

Question 2. Raphael wants to set up a scholarship at his alma mater. He is willing to invest $500 000 in an account earning 10 per cent. What will be the annual scholarship that can be given from this investment?

Question 3. Cheshire Ltd borrowed $152 300 from a bank for three years. If the quoted rate (APR) is 11.75 per cent, and the compounding is daily, what is the effective annual rate (EAR)?

Question 4. Absosmurfly Shippers, Ltd, have forecast earnings of $1 233 400, $1 345 900, and $1 455 650 for the next three years. What is the future value of these earnings if the firm's opportunity cost is 13 per cent?

Reference no: EM133239568

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