Problem VI: Annual effective interest rate is 10%. You are thinking about the present value of two different perpetuities. The first has payments which start at $100 per year and increase by 10% cach year.forever. The second has payments which start at $1000 and increase by $1000 each year forever. Discuss the challenges and approaches you would use to try to find the present values. Bonus: For extra credit, find the present values.

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
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Problem VI: Annual effective interest rate is 10%. You are thinking about the present value of two different perpetuities. The first
has payments which start at $100 per year and increase by 10% cach year.forever. The second has payments which start at $1000
and increase by $1000 each year forever. Discuss the challenges and approaches you would use to try to find the present values.
Bonus: For extra credit, find the present values.
Your answer
Transcribed Image Text:Problem VI: Annual effective interest rate is 10%. You are thinking about the present value of two different perpetuities. The first has payments which start at $100 per year and increase by 10% cach year.forever. The second has payments which start at $1000 and increase by $1000 each year forever. Discuss the challenges and approaches you would use to try to find the present values. Bonus: For extra credit, find the present values. Your answer
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