What is the present value of such a perpetuity

Assignment Help Finance Basics
Reference no: EM13263984

What is the value today of a 10,000 payment made in perpetuity assuming a 8% discount rate?
Assume the same perpetuity as above but the payments will not begin for another 5 years. What is the present value of such a perpetuity?
What is the relationship between the present value and time? Explain.
What is the relationship between present value and the discount rate? Explain.
Please show how you got the answers.

Reference no: EM13263984

Questions Cloud

What is the present value of your interest : A family trust will convey property to you in 15 years. If the property is expected to be worth 50,000 when you receive it, what is the present value of your interest, discounted at 10 percent annually?
Ow many shares of stock will be outstanding after the stock : The firm has decided to spend all of its excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed?
How many dollars of revenue must the company generate : Winny's Office Furniture has a contribution margin ratio of 16%. If fixed costs are $180,800, how many dollars of revenue must the company generate in order to reach the break-even point?
What will be the ex-dividend stock price under new growth : The management wants the company to grow. Rather than pay out all of the firm's earnings as a dividend this year (t = 0), the management wants to plow back 60 percent of the earnings into the business.
What is the present value of such a perpetuity : What is the value today of a 10,000 payment made in perpetuity assuming a 8% discount rate?
What is the approximate market value of the bond : A 15-year zero-coupon bond was issued with a $1,000 par value to yield 8%. What is the approximate market value of the bond?
What is the market value of the bond : a 10 year bond pays 5% on a face value of $1,000. If similar bonds are currently yielding 10%, what is the market value of the bond? Use annual analysis.
How many shares need to be sold : The offer price is $45 per share and the company's underwriters charge a spread of 7 percent. The SEC filing fee and associated administrative expenses of the offering are $550,000. (Enter your answer as directed, but do not round intermediate cal..
What is the incremental free cash flow for year one : Working capital is expected to increase by $5,000 at the inception of the project, but this amount will be recaptured at the end of year five. What is the incremental free cash flow for year one?

Reviews

Write a Review

Finance Basics Questions & Answers

  Estimating the break even point

A corporation produces glue in eight ounce tubes. The total fixed costs for the production of the glue are $477,999.50.

  Compute depreciation expense for the fourth year

Assume Kathleen's computed depreciation expense of $140,000 per year. After three years, Kathleen's determined that the machine would last eight more years (for a total of 11 years). Compute depreciation expense for the fourth year.

  Microsoft motives for accumulating and holding cash

What are the business motives for holding cash in general? Of these motives, which one is most likely driving Microsoft's accumulation of cash? Explain your answer in detail.

  Computation of the accounting break-even level of output

Computation of the accounting break-even level of output and where the required return on the project is 15 percent

  Computing future values in given case

Chuck Tomkovick is planning to spent $25,000 today in mutual fund that will offer a return of eight percent each year. What will be the value of investment in ten years?

  Global common denominator for valuing employees

Is there global common denominator for valuing employees, particularly related to compensation?

  Computing future value of annuity over time

If you can earn eight percent per year on your retirement account, how much will you have to save each year if you want to retire in 20 years with $1 million?

  All mortgages in the pool carry a fixed interest

All mortgages in the pool carry a fixed interest

  What is the banks cost of preferred stock

Sixth Fourth Bank has an issue of preferred stock with a $6.10 stated dividend that just sold for $123 per share. What is the bank's cost of preferred stock?

  Principles of modern finance

Standard deviation of the return of the tangency portfolio

  Determining exchange rate systems

There are flexible (floating) and fixed exchange-rate systems that nations use to correct imbalances in the balance of payments. When a nation has a payment deficit foreign exchange rates will increase

  Describe variable expense and fixed expense

Define and describe following type of expenses & give some example of a business activity from profession that may change amount of variable expenses with each definition.

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