Write down the growing perpetuity formula

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Reference no: EM131234010

1. From memory, write down the growing perpetuity formula.

2. What is the PV of a perpetuity paying $5 each month, beginning this month (in 1 second), if the monthly interest rate is a constant 0.5%/ month (6.2%/year) and the cash flows will grow at a rate of 0.1%/month (1.2%/year)?

3. What is the PV of a perpetuity paying $8 each month, beginning this month (in 1 second), if the monthly interest rate is a constant 0.5%/ month (6.2%/year) and the cash flows will grow at a rate of 0.8%/month (10%/year)?

Reference no: EM131234010

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