Q4.026. Growing perpetuities Mark Weinstein has been working on an advanced technology in laser eye surgery. His technology will be available in the near term. He anticipates his first annual cash flow from the technology to be $175,000, received two years from today. Subsequent annual cash flows will grow at 3.8 percent in perpetuity. What is the present value of the technology if the discount rate is 9.7 percent?
Q4.026. Growing perpetuities Mark Weinstein has been working on an advanced technology in laser eye surgery. His technology will be available in the near term. He anticipates his first annual cash flow from the technology to be $175,000, received two years from today. Subsequent annual cash flows will grow at 3.8 percent in perpetuity. What is the present value of the technology if the discount rate is 9.7 percent?
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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![[Tutor only lecture question a). The remaining question is for homework.]
Q4.026. Growing perpetuities Mark Weinstein has been working on an advanced technology in laser
eye surgery. His technology will be available in the near term. He anticipates his first annual cash
flow from the technology to be $175,000, received two years from today. Subsequent annual cash
flows will grow at 3.8 percent in perpetuity. What is the present value of the technology if the
discount rate is 9.7 percent?
Q4.028. Annuity Present Value What is the present value of an annuity of $7,300 per year, with the
first cash flow received 3 years from today and the last one received 30 years from today? Use a
discount rate of 7 percent.
Q4.032. Perpetuities Young Pharmaceuticals is considering a drug project the costs $2.75 million
today and is expected to generate end-of-year annual cash flow of $273,000 forever. At what discount
rate would Young be indifferent between accepting or rejecting the project?
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Transcribed Image Text:[Tutor only lecture question a). The remaining question is for homework.]
Q4.026. Growing perpetuities Mark Weinstein has been working on an advanced technology in laser
eye surgery. His technology will be available in the near term. He anticipates his first annual cash
flow from the technology to be $175,000, received two years from today. Subsequent annual cash
flows will grow at 3.8 percent in perpetuity. What is the present value of the technology if the
discount rate is 9.7 percent?
Q4.028. Annuity Present Value What is the present value of an annuity of $7,300 per year, with the
first cash flow received 3 years from today and the last one received 30 years from today? Use a
discount rate of 7 percent.
Q4.032. Perpetuities Young Pharmaceuticals is considering a drug project the costs $2.75 million
today and is expected to generate end-of-year annual cash flow of $273,000 forever. At what discount
rate would Young be indifferent between accepting or rejecting the project?
étv
MacBook Pro
G Search or type URL
$
&
5
7
8
9
{
R
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P
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