What is present value of the perpetuity

Assignment Help Financial Management
Reference no: EM131548939

A perpetuity will make annual payments with the first payment coming 9 years from now. The first payment is for $4500, and each payment that follows is $130 dollars more than the previous one. If the effective rate of interest is 6.2%, what is the present value of the perpetuity?

Reference no: EM131548939

Questions Cloud

What is the effective rate on entire balance : What is the effective interest rate if loan terms are 30 years, 11%, 0 points, OFV, what is the effective rate on entire balance?
Offered the opportunity to buy into a real estate investment : You have been offered the opportunity to buy into a real estate investment.
Calculate by what percentage e the price of the bond : Calculate by what percentage e the price of the bond has increased over the past year based on the decline of the yield to maturity.
Take account of cash flows over a project full life : One defect of the IRR method is that it does not take account of cash flows over a project's full life.
What is present value of the perpetuity : A perpetuity will make annual payments with the first payment coming 9 years from now. what is the present value of the perpetuity?
Potential ramifications of the norwegian fund sale : What are the potential ramifications of the Norwegian Fund's sale of Wal-Mart stock? How should Ray Bracey respond to Norwegian Fund's sale of Wal-Mart stock.
What is the value of call option : Suppose the current price of the company's stock is $81. What is the value of the call option if the exercise price is $66 per share?
How many units were produced : The direct materials quantity variance was $750 unfavorable and the direct materials price variance was $3,000 favorable. How many units were produced?
Will she reach her goal of being able to spend : Will she reach her goal of being able to spend $250,000 during retirement?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the firm cost of preferred stock

If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the issue price. What is the firm's cost of preferred stock?

  What was the fourth years return

What was the fourth year's return?

  About the value today

What is the present value of $3,525 per year, at a discount rate of 10 percent, if the first payment is received 7 years from now and the last payment is received 25 years from now?

  Palladium eliminates opportunities for arbitrage

The spot price of palladium is $786.20 per ounce. what forward price for palladium eliminates opportunities for arbitrage?

  Bonds help achieve the goal of less expensive capital

Capital is essential to entities of any size. Capital can be in the form of cash, advances on the lines of credit, and bank financing. Larger corporations often need to raise a larger amount of capital. Does the issuance of bonds help achieve the goa..

  What is company target debt-equity ratio

Fama’s Llamas has a weighted average cost of capital of 10 percent. The company’s cost of equity is 14 percent, and its pretax cost of debt is 8 percent. The tax rate is 38 percent. What is the company’s target debt−equity ratio?

  Retail firm assets are held as working capital

Close to 50% of the typical industrial and retail firm's assets are held as working capital. Many newly minted college graduates work in positions that focus on working capital management, particularly in small businesses in which most new jobs are c..

  What is the stock price after the recap

Lee Manufacturing's value of operations is equal to $960.00 million after a recapitalization (the firm had no debt before the recap). Lee raised $244.00 million in new debt and used this to buy back stock. Lee had no short-term investments before or ..

  Introduce and explain the capital asset pricing model

Introduce and explain the Capital Asset Pricing Model. What is it intended to calculate, and why is it useful in finance?"

  Fiasco be to provide equally economical transportation

How low could the resale value of the Fiasco be to provide equally economical transportation?

  Calculate the projects npv-irr-mirr and payback

Old Dominion is considering adding a new type of wind tamer to its trailers, which will save the company in fuel costs each year and the required rate of return is 9%. The expected life of the units are 5 years and the expected cash flows for each un..

  Cash flows that are uncorrelated with spot exchange rates

You work for a U.S.? firm, and your boss has asked you to estimate the cost of capital for countries using the euro. You know that S = $1.2467/€ and F1=$1.1615/€. Suppose the dollar WACC for your company is known to be 7.6%. If these markets are inte..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd