An Investment scheme is generating returns of Rs.65,000 per year for first two years, from third year returns will grow at 5 percent for three years and thereafter returns will grow at 4 percent per annum forever. Discount rate is 10 percent. You are required to calculate the present value of returns.
An Investment scheme is generating returns of Rs.65,000 per year for first two years, from third year returns will grow at 5 percent for three years and thereafter returns will grow at 4 percent per annum forever. Discount rate is 10 percent. You are required to calculate the present value of returns.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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(a) An Investment scheme is generating returns of Rs.65,000 per year
for first two years, from third year returns will grow at 5 percent for
three years and thereafter returns will grow at 4 percent per annum
forever. Discount rate is 10 percent. You are required to calculate
the present value of returns.
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