What is the value of growing perpetuity

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Reference no: EM131822225

1. Uncle Bob passed away but in his will he had promised to leave you an annuity that will pay $1000 next year and the annuity will grow at an annual rate of 4%. The payments are expected to go on indefinitely and the interest rate is 12%. What is the value of the growing perpetuity?

2. You note the following yield curve in The Wall Street Journal. According to the unbiased expectations hypothesis, what is the one-year forward rate for the period beginning one year from today, 2f1? Maturity Yield One day 3.00 % One year 5.00 Two years 6.25 Three years 8.00.

Reference no: EM131822225

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