Present value of a perpetuity, Financial Accounting

Assignment Help:

PVA∞ = A(1 + k)-1 +  A(1 + k)-2+..... + A(1 + k)∞ + 1+ A (1 + k)∞

Multiplying both the sides of Eq (a7) by (1+k) provides:

PVA∞  = (1 +k) = A(1 +k) +A (1 +k)-1 +......A (1 +k)-∞ + 2 +A(1 + k)-∞ +1

Subtracting Eq (a7) from eq (a8) provides:

PVA∞ k = A [1 - (1 + k)∞ ]

 As (1 + k)-∞  → o eq.(a8) turns into:

PVA∞ k = A

 ⇒ PVA∞ = A/k


Related Discussions:- Present value of a perpetuity

Calculate the payback and discounted payback periods, Assume that the compa...

Assume that the company has an investment opportunity. Building a new factory would cost $750 million but would reduce cash operating costs by $150 million per year for the next 1

Communication skills assignment, I have one assignment of this course (dip...

I have one assignment of this course (diploma Financial Planning), can you help me in doing my assignment

Nature of a deeds of arrangement-bankruptcy and liquidation, Nature of a De...

Nature of a Deeds of Arrangement To avoid the expense and delay involved in a bankruptcy, a debtor in trouble may make a private arrangement with the creditors to accept paymen

Fully secret trusts-secret trusts-trusts laws, Fully secret trusts This...

Fully secret trusts This is where neither the existence nor the terms of the trust are disclosed in the will. The trust will be enforced only if the following conditions are

Show the foreign tax credit, Q. Show the Foreign Tax Credit? Foreign Ta...

Q. Show the Foreign Tax Credit? Foreign Tax Credit - A U.S. taxpayer who pays or accrues income tax to a foreign country may elect to credit or deduct these taxes in a determin

Fraudulent preferences-fraudulent conveyances, Fraudulent preferences ...

Fraudulent preferences The trustee can set aside any transaction effected within the six months preceding the presentation of the petition in circumstances such as to make it

Ideal minority interest, IDEAL MINORITY INTEREST The minority interest id...

IDEAL MINORITY INTEREST The minority interest ideally is entitled to the profit after tax in minority interest. However due to consolidation, the profits of the subsidiary compan

Alternative dispute resolutions, Question 1 a. Contractual liability m...

Question 1 a. Contractual liability may be discharged in certain circumstances. Discuss. b. "An aggrieved party in a breach of contract is entitled to claim for damages"

What is asset acquisition, Asset Acquisition An alternate way of condu...

Asset Acquisition An alternate way of conducting a buyout by purchasing few assets an industry may have inspite of purchasing that organizations stock.

Write Your Message!

Captcha
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