What is present value of perpetuity

Assignment Help Financial Management

Reference no: EM131965931

1. You have $500 that you would like to invest. You have 2 choices: Savings account A which earns 8% compounded annually, or savings account B which earns 7.90% compounded semiannually. Which would you choose and why? Show all calculations.

2. What is the present value of a perpetuity of $ 5,000 that provides the first payment in 7 years? Your opportunity cost is 10%, compounded daily.

3. Nine years ago, a woman invested $6,000. In the first 3 years, her investment earned 5 % compounded annually. In the next 2 years, the rate was 8% compounded semiannually, and in the last 3 years the rate was 10% continuously compounded. What was the value of her investment at the end of the 8 years?

Reference no: EM131965931

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