Question content area top Part 1 (Present value of a perpetuity) At a discount rate of 17.50%, find the present value of a perpetual payment of $ 5,000 per year. If the discount rate were lowered to 8.75%, half the initial rate, what would be the value of the perpetuity?
Question content area top Part 1 (Present value of a perpetuity) At a discount rate of 17.50%, find the present value of a perpetual payment of $ 5,000 per year. If the discount rate were lowered to 8.75%, half the initial rate, what would be the value of the perpetuity?
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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Question content area top
Part 1
(
17.50%, find the present value of a perpetual payment of $
5,000 per year. If the discount rate were lowered to
8.75%, half the initial rate, what would be the value of the perpetuity?
Question content area bottom
Part 1
a. If the discount rate were
17.50%, the present value of the perpetuity is $
enter your response here
. (Round to the nearest cent.)
Part 2
b. If the discount rate were lowered to
8.75%, half the initial rate, the present value of the perpetuity is $
enter your response here
. (Round to the nearest cent.)
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