What is the present value of growing perpetuity

Assignment Help Financial Management
Reference no: EM131982892

You are evaluating a growing perpetuity product from a large financial services firm. The product promises an initial payment of $20,000 at the end of this year and subsequent payments that will thereafter grow at a rate of 0.03 annually. If you use a discount rate of 0.08 for investment products, what is the present value of this growing perpetuity?

Reference no: EM131982892

Questions Cloud

What is the maximum price per share schultz should pay : The cash flows are expected to grow at 8 percent for the next five years before leveling off to 5 percent for the indefinite future.
What is the yield to maturity if the bond is selling : What is the yield to maturity if the bond is selling for $940?
Dealing with promotions within the fire service : In dealing with promotions within the fire service, how important are transparency and objectivity to the future of that department?
Explain decision of government that no specific regulation : HA 3011 Advanced Financial Accounting Assignment - You are required to explain the decision of the government that no specific regulation
What is the present value of growing perpetuity : If you use a discount rate of 0.08 for investment products, what is the present value of this growing perpetuity?
Calculate the companys weighted average cost : Explain and defend why you agree or disagree. Report how would you advise the CEO.Calculate the company's weighted average cost of capital.
Explain the definition of organizational behavior : Without using outside sources, please explain the definition of organizational behavior and describe the role and purpose of organizational behavior.
Discuss role of net income in firm valuation : Discuss the role of net income in firm valuation under the ideal conditions VS. Its Role under the presence of uncertainty.
Why does a company need a succession plan : Why does a company need a succession plan? What are some issues with the use of a succession plan? would like a answer for this question thanks refererences.

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the company pre-tax cost of debt

Gamestop has the following debt issues outstanding. Calculate the company's pre-tax cost of debt.

  Sewage system-municipal bonds if bond is held until maturity

what is the maximum price the investor can pay for one of the municipal bonds if the bond is held until maturity?

  Dividend payments affect future growth of the company

What signals does the initiation and continuance of the dividend payments make to the market? How will dividend payments affect future growth of the company.

  Mortgage interest rate they offer you on your credit rating

Mortgage lenders base the mortgage interest rate they offer you on your credit rating. This makes it financially critical to maintain a credit score of 700 or higher. How much more interest would you pay on a $184,000 home if you put 20% down and fin..

  How should leroux think about strategies for the future

How should Leroux think about strategies for the future in an increasingly interdependent global financial system? Were the changes sustainable?

  What will the forecast for next year earnings per share be

If the $35,943,750 needed for the project is raised by issuing new debt, what will the forecast for next year’s earnings per share be?

  Slower future growth can be expected

Many companies grow very fast at first, but slower future growth can be expected. Such companies are called:

  Firms stock price for few days surrounding news announcement

Moving money in and out of the market based on your market expectations is called _____ and tends to lead to returns that are _____ than the overall market return, assuming that the market is relatively efficient. Which one of the following involves ..

  What is the contribution to asset base of under Base III

What is the contribution to the asset base of the following items under the Basel III requirements?

  Find the effective annual rate

Find the effective annual rate (EAR) for a 14.0% APR with monthly compounding.

  What is the most that you should be willing to pay for it

If the opportunity cost for an investment of this level of risk is 14%, what is the most that you should be willing to pay for it?

  Alongside general services managers

Financial managers may work alongside general services managers to address certain measures of liquidity. How might a financial manager and the department administrator for your chosen capital investment plan work together to make an effort on red..

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