Value of a perpetual stream of payments
Not what you're looking for?
Given an interest rate of 10% per year, what is the value at the end of 5 years of a perpetual stream of 120$ annual payments starting at the end of year 9?
I dont understand the time fator in this question - i.e how do you encorporate year 9 and year 5 into the appropriate formula
Please provide the formula, solution and a brief explanation.
Purchase this Solution
Solution Summary
Value of a perpetual stream of payments is determined.
Solution Preview
Hello!
The easiest way to approach this problem is to first calculate the value of this perpetuity at the end of year 9, and then find its value at the end of year 5.
If we're standing at the end of year 9, we will receive $120 now, $120 one year from now, $120 two years from now, etc. Given that the interest rate is 10% (0.10), the present value of th perpetuity, when standing at the end of year 9 ...
Purchase this Solution
Free BrainMass Quizzes
Basics of corporate finance
These questions will test you on your knowledge of finance.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
Change and Resistance within Organizations
This quiz intended to help students understand change and resistance in organizations