An investment offers $6,100 per year for 15 years, with the first payment occurring one year from now. If the required return is 6 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever? Payment per year # of years Required rate of return # of years # of years 6,100 15 6% 40 75 Complete the following analysis. Do not hard code values in your calculations. Your answers should be positive. Value today with 15 years payments Value today with 40 years payments Value today with 75 years payments Value today of perpetuity
An investment offers $6,100 per year for 15 years, with the first payment occurring one year from now. If the required return is 6 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever? Payment per year # of years Required rate of return # of years # of years 6,100 15 6% 40 75 Complete the following analysis. Do not hard code values in your calculations. Your answers should be positive. Value today with 15 years payments Value today with 40 years payments Value today with 75 years payments Value today of perpetuity
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:An investment offers $6,100 per year for 15 years, with the first payment occurring
one year from now. If the required return is 6 percent, what is the value of the
investment? What would the value be if the payments occurred for 40 years? For
75 years? Forever?
Payment per year
# of years
Required rate of return
# of years
# of years
6,100
15
6%
40
75
Complete the following analysis. Do not hard code values in your
calculations. Your answers should be positive.
Value today with 15 years payments
Value today with 40 years payments
Value today with 75 years payments
Value today of perpetuity
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