User Account

All Pages

What is the present value of the growing perpetuity

Assignment Help Financial Management
Reference no: EM131089543

What is the present value of a perpetual stream of cash flows that pays $80,000 at the end of one year and grows at a rate of 7% indefinitely?

The rate of interest used to discount the cash flows is 9%. What is the present value of the growing perpetuity?

Verified Expert

This assignment requires calculating the present value of a growing perpetuity using the time value of money concept.

Reference no: EM131089543

Questions Cloud

Prepare appropriate summary statistics on each variable : BUS201 Assignment. Descriptive analysis, Prepare appropriate summary statistics on each variable and comment on each of these. Also look at the histograms and the separate line plots for each company. Comment
Consumers distributed uniformly around the circle : Suppose there are 8 firms located equidistantly around a circle whose circumference is equal to 1. There are 400 consumers distributed uniformly around the circle. Each consumer gets utility U = 3.5 from buying a unit of the good from a firm which se..
Which government is right for you : "Which government is right for you?" Perhaps a better way of saying it is this: would you like a caretaker type of government who looks out for you or would you like a hands-off type of government that basically let's you make your own decisions? For..
Designed to reduce moral hazard created by deposit insurance : Which of the following are regulations that are designed to reduce the moral hazard created by deposit insurance?
What is the present value of the growing perpetuity : What is the present value of a perpetual stream of cash flows that pays $80,000 at the end of one year and grows at a rate of 7% indefinitely?
Good idea for the fed to pay interest on bank reserves : Banks today have more than $2 trillion in excess reserves, i.e., reserves beyond what they are required to keep. (Required reserves are less than $0.2 trillion, by the way.) Before 2008, banks kept almost no excess reserves. Why, according to some pe..
How much will sarah have to invest today : How much will Sarah have to invest today? If she earned an annual return of 18%, how soon could she then retire?
What is the proportion for smoker for men : In a survey to identify of risk factors for heart disease among men and women were asked about if they ever smoke. Of the 430 men, 116 said they smoke. Of the 380 women, 73 said they smoke. What is the proportion for smoker for men
Write an essay examining a cultural conflict : What conflict have you chosen and what are your initial impressions of the economic, cultural, political, and territorial causes of the conflict?

Reviews

Write a Review

Financial Management Questions & Answers

  Mature manufacturing firm-pay for a share

Antiques R Us is a mature manufacturing firm. The company just paid a $10.46 dividend, but management expects to reduce the payout by 4 percent per year indefinitely. If you require a 11.5 percent return on this stock, what will you pay for a share t..

  Face value bond is currently quoted

A $1,000 face value bond is currently quoted at 101.2. The bond pays semiannual payments of $28.50 each and matures in six years. What is the coupon rate?

  Calculate the return of share prices

Calculate the return of share prices (rj) and market return (rm) (from market price index). Display the calculated returns along with the risk free rate of return (given in a separate excel file) in a table for two sub periods. Calculate and tabul..

  Company pays current dividend of per share of common stock

A company pays a current dividend of $1.20 per share of common stock. The annual dividend will increase by 3%, 4% and 5%, respectively, over the next three years, and by 6% per year thereafter. The appropriate discount rate is 12%. What is the price ..

  Suppose the current long-term government bond yield

Suppose the current long-term government bond yield is 2 percent and the estimated market risk premium is 5 percent. Fastest Company’s beta is estimated to be 1.15. Using CAPM, estimate Fastest Company’s cost of common equity.

  Find the coupon payments

A bond issued by company ABC has 7% coupon, 10 years to maturity, and is currently priced at $1010. What is the bond’s yield? (show the steps and calculations you did) Find the coupon payments. Draw the time-line diagram.

  Is it possible for a firm to have too much cash

Is it possible for a firm to have too much cash? Why would shareholders care if a firm accumulates large amounts of cash? What options are available to a firm if it believes it has too much cash? How about too little?

  Compute the rate of capital for the firm

Compute the rate of capital for the firm for the following: A bond that has a $1000 par value and a coupon interest rate of 12.6% with interest paid semiannually. A new issue would sell for $1,145 per bond and mature in 20 years. The firm's tax rate ..

  Without referring to the preprogrammed function

Future value calculation Without referring to the preprogrammed function on your financial calculator, use the basic formula for future value along with the given interest rate, r, and the number of periods, n, to calculate the future value of $1 in ..

  Knowledge of managerial finance

What industry is your company part of? Who are some of the company's primary competitors? What doe the future look like for this industry - The current ratio indicates the extent to which current liabilities are covered by those assets that are exp..

  Price the bonds if your required rate of return

Bond-A: $ 1000 Face value, 5 year term, 5% coupon. Bond-B: $ 1000 Face value, 20 year term, 5% coupon. Price the bonds if your required rate of return is 5%. Price the bonds if your required rate of return is 7%. Compute the percentage change in the ..

  Calculate the charge necessary to cover cost

Next year Holyspirit healthcare organization will serve 100 patients in the following manner. Calculate the charge necessary to cover ABC’s cost

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd