3. A particular investment promises to make year-end annual payments in perpetuity. The first four annual payments will be $5. After that, future annual payments will grow at 5% per yea forever. What is the present value of this investment if the discount rate is 10%? a. $98.68 b. $87.57 c. $76.46 d $65.35

3. A particular investment promises to make year-end annual payments in perpetuity. The first four annual payments will be $5. After that, future annual payments will grow at 5% per yea forever. What is the present value of this investment if the discount rate is 10%? a. $98.68 b. $87.57 c. $76.46 d $65.35

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 15PROB

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Question

8. A particular investment promises to make year-end annual payments in perpetuity. The first
four annual payments will be $5. After that, future annual payments will grow at 5% per year
forever. What is the present value of this investment if the discount rate is 10%?
a. $98.68
b. $87.57
c. $76.46
d. $65.35
e. $54.24

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