Time Magazine: The announcement was made on June 17, 1929: Perpetual Subscription In announcing a Perpetual Time Subscription, the publishers believe their action is without precedent in Publishing history. Life Subscriptions there have been. But the thought of Time’s being limited to a single lifetime is incongruous. Time is timeless and so, too, is Time’s Perpetual Subscription. Sixty dollars, payable at the expiration of your present subscription, will bring Time to you during your lifetime – to your heir and his heir – to the end of Time. June 17, 1929 Assume that a year’s subscription to Time could be purchased for $4 in 1929, that a very safe long-term bond could be purchased to yield 0.07, and that you could borrow very-long-term funds at 0.10. Assume, further, that the value of a perpetual subscription to Time in June 2006 is $400. Assume further that the interest earned on the long-term bond (costing $60) during the interim years exactly covers the cost of buying the magazines. Questions Just considering the value of the subscription after 77 years, was it a good buy if: You had the cash and the alternative was a long-term investment? You had to borrow the purchase price at a cost of 0.10?
Time Magazine: The announcement was made on June 17, 1929: Perpetual Subscription In announcing a Perpetual Time Subscription, the publishers believe their action is without precedent in Publishing history. Life Subscriptions there have been. But the thought of Time’s being limited to a single lifetime is incongruous. Time is timeless and so, too, is Time’s Perpetual Subscription. Sixty dollars, payable at the expiration of your present subscription, will bring Time to you during your lifetime – to your heir and his heir – to the end of Time. June 17, 1929 Assume that a year’s subscription to Time could be purchased for $4 in 1929, that a very safe long-term bond could be purchased to yield 0.07, and that you could borrow very-long-term funds at 0.10. Assume, further, that the value of a perpetual subscription to Time in June 2006 is $400. Assume further that the interest earned on the long-term bond (costing $60) during the interim years exactly covers the cost of buying the magazines. Questions Just considering the value of the subscription after 77 years, was it a good buy if: You had the cash and the alternative was a long-term investment? You had to borrow the purchase price at a cost of 0.10?
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
Time Magazine: The announcement was made on June 17, 1929: Perpetual Subscription
In announcing a Perpetual Time Subscription, the publishers believe their action is without precedent in Publishing history. Life Subscriptions there have been. But the thought of Time’s being limited to a single lifetime is incongruous. Time is timeless and so, too, is Time’s Perpetual Subscription.
Sixty dollars, payable at the expiration of your present subscription, will bring Time to you during your lifetime – to your heir and his heir – to the end of Time.
June 17, 1929
Assume that a year’s subscription to Time could be purchased for $4 in 1929, that a very safe long-term bond could be purchased to yield 0.07, and that you could borrow very-long-term funds at 0.10. Assume, further, that the value of a perpetual subscription to Time in June 2006 is $400.
Assume further that the interest earned on the long-term bond (costing $60) during the interim years exactly covers the cost of buying the magazines.
Questions
Just considering the value of the subscription after 77 years, was it a good buy if:
You had the cash and the alternative was a long-term investment?
You had to borrow the purchase price at a cost of 0.10?
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