ou win the Console Lottery. They payoff is a growing “console” bond. That means that the bond will pay you $100,000 next year and the payment will grow a 3.5% per year forever. If your required return is 8%, what is the value of the bond to you today?
ou win the Console Lottery. They payoff is a growing “console” bond. That means that the bond will pay you $100,000 next year and the payment will grow a 3.5% per year forever. If your required return is 8%, what is the value of the bond to you today?
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
Related questions
Question
You win the Console Lottery. They payoff is a growing “console” bond. That means that the bond will pay you $100,000 next year and the payment will grow a 3.5% per year forever. If your required return is 8%, what is the
Group of answer choices
$2,222,222.
$1,250,000.
$100,000.
$2,857,143.
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