MN.50. The present value of an infinite stream of dollar payments of $z (that starts next year) is $z/i when the nominal interest rate, i, is constant. This formula gives the price of a consol-a bond paying afixed nominal payment each year, forever. It is also a good approximation for the present discounted value of a stream of constant payments over long but not infinite periods, as long as i is constant.Suppose that i = 4%. Let $z= $500.The present value of the consol is $ 12500. (Enter your response as a whole number.)Find the expected present discounted value of each of the following bonds. (Hint: Use the formula from the chapter but remember to adjust for the first payment.)If i = 4%, the expected present discounted value of a bond that pays $500 per year over the next 10 years is $(Round your response to the nearest whole number.)If i = 4%, the expected present discounted value of a bond that pays $500 per year over the next 20 years is $(Round your response to the nearest whole number.)(Round your response to the nearest whole number.)If i = 4%, the expected present discounted value of a bond that pays $500 per year over the next 30 years is $If i = 4%, the expected present discounted value of a bond that pays $500 per year over the next 50 years is $(Round your response to the nearest whole number.)

Present value of the future cash flow of the bonds depends on the period of cash flow and discount…

nominal payment each year, forever. It is also a good approximation for the present discounted value of a stream of constant pa pose that i= 4%. Let $z = $500. present value of the consol is $ 12500. (Enter your response as a whole number.) the expected present discounted value of each of the following bonds. (Hint: Use the formula from the chapter but remember to a 4%, the expected present discounted value of a bond that pays $500 per year over the next 10 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 20 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 30 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 50 years is $ (Round your respo

nominal payment each year, forever. It is also a good approximation for the present discounted value of a stream of constant pa pose that i= 4%. Let $z = $500. present value of the consol is $ 12500. (Enter your response as a whole number.) the expected present discounted value of each of the following bonds. (Hint: Use the formula from the chapter but remember to a 4%, the expected present discounted value of a bond that pays $500 per year over the next 10 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 20 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 30 years is $. (Round your respo 4%, the expected present discounted value of a bond that pays $500 per year over the next 50 years is $ (Round your respo

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 12MC: (1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest...

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