When calculated using the annual effective discount rate

Assignment Help Financial Management

Reference no: EM131498050

A thirty year annuity X has annual payments of $2,000 at the beginning of each year for twelve years, then annual payments of $3,000 at the beginning of each year for eighteen years. A perpetuity Y has payments of $Q at the end of each year for twenty years, then payments of $3Q at the end of each year thereafter. The present values of X and Y are equal when calculated using the annual effective discount rate of 12%. Find Q. (Round your answer to the nearest cent.)

Please show work

Reference no: EM131498050

Questions Cloud

Project to extend irrigation canals into desert area : The U.S. Bureau of Reclamation is considering a project to extend irrigation canals into a desert area.

What is nominal annual interest rate : What is the nominal annual interest rate, based upon continuous compounding.

Basic bond valuation : Complex Systems has an outstanding issue of ?$1,000?-par-value bonds with a 8?% coupon interest rate.

Concept of adequate disclosures in financial reporting : Prepare a research paper on the concept of adequate disclosures in financial reporting.

When calculated using the annual effective discount rate : The present values of X and Y are equal when calculated using the annual effective discount rate of 12%.

What amount must you deposit each year : If the account pays 6.80 percent interest, what amount must you deposit each year?

What is the present value of all future payments : What is the present value of all future payments?

How much will you pay for company stock today : The company pledges to increase its dividend by 4.5 percent per year indefinitely. how much will you pay for the company's stock today?

Is the option in the money or out of the money : A put option has an exercise price of $40 and the put premium is $5. Is the option in the money or out of the money?

User Account

All Pages