The first dividend in year 9 ((D9 )) is calculated using (D8 ):D9 = D8 × (1+ g) = 6.70 × 1.05 = 7.035Calculate the present value of the perpetuity starting in year 9:

Step 1:The perpetuity formula is a series of cash flows that continues indefinitely.So the present…

Answered: The first dividend in year 9 ((D9 )) is…

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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Following is a table for the present value of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 4 3.465 3.170 3.037 5 4.212 3.791 3.605 Using the tables provided, the present value of $6,453 (rounded to the nearest dollar) to be received at the end of each of the next 4 years, assuming an earnings rate of 12%, is
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The first dividend in year 9 ((D9 )) is calculated using (D8 ): D9 = D8 × (1+ g) = 6.70 × 1.05 = 7.035 Calculate the present value of the perpetuity starting in year 9: