A local bank advertises the following deal: "Pay us $100 at the end of each year for 12 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever." Calculate the present value of your payments to the bank if the interest rate is 7.25%. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. What is the present value of a $100 perpetuity deferred for 12 years if the interest rate is 7.25%? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
A local bank advertises the following deal: "Pay us $100 at the end of each year for 12 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever." Calculate the present value of your payments to the bank if the interest rate is 7.25%. Note: Do not round intermediate calculations. Round your answer to 2 decimal places. What is the present value of a $100 perpetuity deferred for 12 years if the interest rate is 7.25%? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A local bank advertises the following deal: "Pay us $100 at the end of each year for 12 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever." Calculate the present value of your payments to the bank if the interest rate is 7.25%.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places. What is the present value of a $100 perpetuity deferred for 12 years if the interest rate is 7.25%? Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
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