At an annual effective interest rate of i, i > 0%, the present value of a perpetuity paying 10 at the end of each 3-year period, with the first payment at the end of year 6, is 32. At the same annual effective rate of i, the present value of a perpetuity-immediate paying 1 at the end of each 4-month period is X. Calculate X. a. 40.8 b. 39.8 C. 41.8 d. 42.8 e. 38.8

At an annual effective interest rate of i, i > 0%, the present value of a perpetuity paying 10 at the end of each 3-year period, with the first payment at the end of year 6, is 32. At the same annual effective rate of i, the present value of a perpetuity-immediate paying 1 at the end of each 4-month period is X. Calculate X. a. 40.8 b. 39.8 C. 41.8 d. 42.8 e. 38.8

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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Question

At an annual effective interest rate of i, i > 0%, the present value of a perpetuity paying 10 at the
end of each 3-year period, with the first payment at the end of year 6, is 32.
At the same annual effective rate of i, the present value of a perpetuity-immediate paying 1 at the
end of each 4-month period is X.
Calculate X.
a. 40.8
b. 39.8
41.8
d. 42.8
38.8
C.
e.

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