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 initial selling price of the product, Question: (a) The f...

Question: (a) The following output levels and production costs have been recorded over the last three periods: Required: Using the high-low method, estimate the: (i

Equity shareholders, Equity shareholders, potential and present, seem prima...

Equity shareholders, potential and present, seem primarily to the company's record of earnings. They are thus interested in relationships as earnings per share or EPS and dividends

Protective Trusts-secret trusts-trusts laws and accounts, PROTECTIVE TRUSTS...

PROTECTIVE TRUSTS The income of property may be settled on such terms as to restrict its availability to creditors of the beneficiary in the following ways: (a) Determinable

Heath foods''s bonds , Heath Foods's bonds have 6 years left over to maturi...

Heath Foods's bonds have 6 years left over to maturity. The bonds have a face value of $1,000 and a yield to maturity of 8%. They pay interest yearly and have a 10% coupon rate. Wh

Business, #Which of the two ratios are the greatest? 1.67.1 or 0.29.1

#Which of the two ratios are the greatest? 1.67.1 or 0.29.1

Balance sheet and income statement, Indicate by check mark ("9") or "X" whi...

Indicate by check mark ("9") or "X" which accounts are found on the income statement and which accounts are found on the balance sheet.   Account Name In

how can a flexible budget help managers control costs, 1.  How can a flexi...

1.  How can a flexible budget help managers control costs? A flexible budget can help managers control costs by showing favorable and unfavorable variances within the planning o

Debtor management, what is the process to complete my debtor management pro...

what is the process to complete my debtor management project.

Petition by creditor-bankruptcy, Petition by creditor Any creditor incl...

Petition by creditor Any creditor including an assignee of a debt, may petition, provided: The debt due to him amounts to at least Shs 1,000; The debt is certain and i

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