Heath has won a structured settlement that will pay him $1,500 a month for 5 years. Heath has been offered a one time payment of $70,000 for the payment stream. Based on this offer what is the implied discount rate used to value his payment stream? (Enter your answer as a decimal number to 3 decimal places. So for 5.25% enter .525)
Heath has won a structured settlement that will pay him $1,500 a month for 5 years. Heath has been offered a one time payment of $70,000 for the payment stream. Based on this offer what is the implied discount rate used to value his payment stream? (Enter your answer as a decimal number to 3 decimal places. So for 5.25% enter .525)
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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Transcribed Image Text:Heath has won a structured settlement that will pay
him $1,500 a month for 5 years. Heath has been
offered a one time payment of $70,000 for the
payment stream. Based on this offer what is the
implied discount rate used to value his payment
stream? (Enter your answer as a decimal number to 3
decimal places. So for 5.25% enter.525)
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