What is the pv of the project

Assignment Help Financial Management

Reference no: EM131234438

You must value a perpetual lease. It will cost $100,000 each year in real terms-that is, its proceeds will not grow in real terms, but just contractually keep pace with inflation.

The prevailing interest rate is 8% per year, and the inflation rate is 2% per year forever.

The first cash flow of your project next year is $100,000 quoted in today's real dollars. What is the PV of the project?

(Warning: Watch the timing and amount of your first payment.)

Reference no: EM131234438

Questions Cloud

Do long term bonds pay more than short term bonds : Do long-term bonds pay more than short-term bonds because you only get money after a long time-money that you could need earlier?

What is the 1 year rate of return on a risk free treasury : What is the 1-year rate of return on a risk-free Treasury? - What is the 10-year rate of return on a risk-free Treasury? - What is the 30-year rate of return on a risk-free Treasury?

What is the yield to maturity : 1. What is the yield to maturity? Round your answer to two decimal places. 2. What is the yield to call? Round your answer to two decimal places.

Why are there more types of health care workers today : Why are there more types of health care workers today than 100 years ago, 50 years ago, and even 25 years ago? Why has there been so many new emerging types of health care workers over the past 100 years?

What is the pv of the project : The first cash flow of your project next year is $100,000 quoted in today's real dollars. - What is the PV of the project?

Price of a european call option on a stock : The price of a European call option on a stock with a strike price of $50 is $6. The stock price is $51, the continuously compounded risk-free rate (all maturities) is 6% and the time to maturity is one year.

Identify an environmental controversy : Identify an environmental controversy that is of interest to you. I am in the Unites States, so base this off of the U.S. You might find it useful to read your local newspaper, browse through your textbook, or search online for an environmental co..

Where might such constructs appear in real code : How can these classes be modified to eliminate the order dependence in the constructors?

What is the real interest rate : What is the real interest rate, both accurate and approximate? - What is the correct project PV? - What would you get if you grew a perpetuity project of $20 by the real growth rate of 1%.

User Account

All Pages