Present value of perpetual stream of cash flows

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(Present value of a growing perpetuity) What is the present value of a perpetual stream of cash flows that pays $2,000 at the end of year one and the annual cash flows grow at a rate of 4% per year indefinitely, if the appropriate discount rate is 14%? What if the appropriate discount rate is 12%?

a. If the appropriate discount rate is 14%, the present value of the growing perpetuity is $__. (Round to the nearest cent.)

(Annuity interest rate) Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for $15,207.79 that will pay them $1,500 per year for 30 years. They don't have the slightest idea what return they would be making on their investment of $15,207.79. What rate of return would they be earning?

The annual rate of return your folks would be earning on their investment is __%. (Round to two decimal places.)

Reference no: EM131924748

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