### What is the present value of perpetual stream of cash flows

Assignment Help Finance Basics
##### Reference no: EM132049750

Question: What is the present value of a perpetual stream of cash flows that pays \$4, 000 at the end of year one and the annual cash flows grow at a rate of 2% per year indefinitely, if the appropriate discount rate is 10%? What if the appropriate discount rate is 8%? a. If the appropriate discount rate is 10%, the present value of the growing perpetuity is \$ (Round to the nearest cent.)

#### Questions Cloud

 Prepare statement of cash flows for year using direct method : Redwood had a cash and cash equivalents balance of \$5,200 on January 1, 2016. Prepare a statement of cash flows for the year using the direct method How does compounding compare with discounting : Present values are negatively impacted by higher interest rates. How does compounding compare with discounting? How does the future value of an annuity compare. Explain the forces and changes a electron : Explain the forces and changes a electron undergoes as it forms an intramolecular bond with oxygen to form water molecule. What amount of helium gas occupies : Helium gas is the second most abundant in the universe. What amount of helium gas occupies 12.6 L at STP? What is the present value of perpetual stream of cash flows : What is the present value of a perpetual stream of cash flows that pays \$4, 000 at the end of year one and the annual cash flows grow at a rate of 2% per year. Electron affinity than first ionisation energy : How come potassium has a higher first electron affinity than first ionisation energy? The new JPY-USD exchange rate at the end of the year : If the purchasing power parity holds, what should be the new JPY/USD exchange rate at the end of the year? What is the ph of your swimming pool : The concentration of H3O+ in your swimming pool is 3 x 10-11 M. What is the pH of your swimming pool? Why you would suggest debt financing : The calculation of after-tax cost of debt plays a role in managing capital costs. You have been asked to present a few matters related to Debt (Bond) financing.

### Write a Review

#### Calculate becher expected accounts payable balance

Calculate Becher's expected Accounts Payable balance. (Use a 360-day year for your calculations.)

#### What is ptfc weighted average cost of capital

What is PTFC weighted average cost of capital

#### How can a company attempt to eliminate the knowledge gap

Which of the gaps in Figure 3- 1 do you think represents the major problem for most firms? How can a company attempt to eliminate the knowledge gap? The communications gap?

#### Risk free rate and equity risk premium

Assume the company's current ROE is 10.0%, its tax rate is 35.0%, the risk free rate and equity risk premium are currently 4.0% and 6.5%, respectively. What would its levered beta be if this revised capital structure were adopted?

#### Appropriate method given the information

Find the VAR for one year at a probability of 0.05. Identify and use the most appropriate method given the information you have. Using the information you obtained in part a, find the VAR for one day.

#### Efficient form of measuring risk

Write a review of the given article. Explain the key points that the author is trying to communicate. The review should be at least two pages in addition to the title and reference pages.

#### What is the annual value of the depreciation tax shield

The initial investment will require \$96,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project. The company has a marginal tax rate of 32 percent. What is the annual val..

#### If the stock is selling for 50 today and the required rate

if the stock is selling for 50 today and the required rate of return is 15 what is the expected annual dividend growth

#### Finance area of a company

You are an individual within the finance area of your company, and you are preparing final budgets to present to your board of directors for the coming year.

#### Calculate and evaluate the firm sustainable growth rate

Using the company's financial statements, calculate and evaluate the firm's sustainable growth rate (SGR) for the last 2-3 years, and summarize your findings in your paper. Be sure to address the following:

#### Basic rule in capital budgeting

A basic rule in capital budgeting is that if two independent projects have NPVs that are greater than zero, both projects should be accepted.

#### What was the contribution of security selection

Calculate the total value added of all the manager's decisions this period and calculate the value added (or subtracted) by her country allocation decisions - What was the contribution of security selection to relative performance