Perpetuity is constant stream of cash flows

Assignment Help Financial Management
Reference no: EM13846295

Perpetuity is a constant stream of cash flows without end. Why doesn’t it have an infinite value? Under what cases can we easily calculate its value?   

Reference no: EM13846295

Questions Cloud

Long run average stock return-current t-bill return : Use the information below to estimate the expected retur on the stock of Bieber Corporation. Long run average stock return-Current T-bill return
What would his monthly payments be at this rate : David would like to buy a new boat. The boat costs $75,000. David can put 20% down and would like to finance the rest with a 10 year loan. The bank is offering a rate of 3.99% APR on that term. What would his monthly payments be at this rate?
Comprehensive problems-compute incremental return on sales : Proposal #1 would extend trade credit to some customers that previously have been denied credit because they were considered poor risks. Compute the incremental Return on Sales if these new credit customers are accepted: Would establish local collect..
What determines the price of financial instruments : What determines the price of financial instruments? Which are riskier, capital market instruments or money market instruments? Why? What are the four major functions of the Federal Reserve System? What are the main responsibilities of the FOMC?
Perpetuity is constant stream of cash flows : Perpetuity is a constant stream of cash flows without end. Why doesn’t it have an infinite value? Under what cases can we easily calculate its value?
In tax less world with no brokerage coasts : In a tax less world with no brokerage coasts, repurchases and dividends have the same effect on shareholder wealth. In the real world, however, repurchases provide more preferable tax treatment than dividends to ordinary investors. Is it necessary fo..
Major stake of shares and is threatening to exert influence : Suppose a firm finds itself as the target of a possible hostile takeover. An outsider investor has acquired a major stake of shares and is threatening to exert influence on the board.
Invest in business facility improvement-pay interest expense : A firm can make any form of distribution to its shareholders using the free cash flow tht it generates. The underlying objective is to maximize shareholder wealth by increasing the firm's value. Invest in business facility improvement. Pay interest e..
Actual implementation of their distribution policy : Which of the following help firms determine the actual implementation of their distribution policy? check all that apply?

Reviews

Write a Review

Financial Management Questions & Answers

  Determine the future values

Determine the future values $5,000 is invested in each of the following situations:

  Describe financial management in non-profit organizations

discuss financial management in nonprofit organizations and write an essay that compares and contrasts the application

  What is the objective companies attempt to achieve

What is the objective companies attempt to achieve when managing bank relations and name the three major paper-based payment mechanisms and explain each

  Draw up balance sheet and income statement

Draw up balance sheet and income statement.

  How much would you be willing to pay for this security

Suppose that one year has elapsed, you have received the first payment of $600, and the market interset rate is still 5 percent. How much would another investor be willing to pay for your security?

  About the time value of money

You just started working full-time, earning $100,000 per year. Your goal is to have $5 million in your 401(k) plan by your 61st birthday (i.e., 40 years from today). Assume 3% inflation per year.

  What is the firms aftertax cost of debt

Electronic Products has 35,000 bonds outstanding that are currently quoted at 102.3. The bonds mature in 11 years and carry a 9 percent annual coupon. What is the firm's aftertax cost of debt if the applicable tax rate is 30 percent?

  What interest rate did she obtain on her investment

A woman made ten annual end-of-the-year purchases of $1000 of common stock. At the end of the tenth year, she sold all the stock for $12000.  What interest rate did she obtain on her investment?

  What is the standard deviation of the number of claims

You have 100 business clients who own businesses that you insure against floods. The probability density function of the number of claims k per year for these 100 clients when rainfall is at or below average (which happens 50% of the time) is describ..

  Potential competitors and structures of the market

In the hope of high returns, venture capitalists provide funds to finance new companies. However, potential competitors and structures of the market into which the new firm enters are extremely important in realization of profits.

  The largest percentage increase in price

Assume that all interest rates in the economy decline from 10% to 9%. Which of the following bonds would have the largest percentage increase in price?

  What is expected return and standard deviation of portfolio

Stock X has an expected return of 8% and Stock Z has an expected return of 12%. The standard deviation of the expected return is 10% for both stocks. Assume that these are the only two stocks available in a hypothetical world. What is the expected re..

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