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You are given the following time line; CFs are at the end of the year. Years: 1 2 3 4 5 -on--> CF $s 100 100 100 This is a perpetuity that starts in year 4 end. The required return is; 6.00% Calculate the PV of the perpetuity in year-end 3 (begin 4) at the required return: What is the present value at t = 0?

You are given the following time line; CFs are at the end of the year. Years: 1 2 3 4 5 -on--> CF $s 100 100 100 This is a perpetuity that starts in year 4 end. The required return is; 6.00% Calculate the PV of the perpetuity in year-end 3 (begin 4) at the required return: What is the present value at t = 0?

Essentials Of Investments
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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Please need help to calculate attached 2 questions in excel formula 

 

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--- **Financial Calculation of Perpetuity** You are given the following timeline for cash flows (CFs), which occur at the end of each year: - **Years**: | 0 | 1 | 2 | 3 | 4 | 5 | ... | - **CF $s**: | 0 | 0 | 0 | 0 | 100 | 100 | 100 | This scenario describes a perpetuity that begins at the end of year 4. The required return rate is provided as 6.00%. **Tasks:** 1. Calculate the present value (PV) of the perpetuity at the end of year 3 (beginning of year 4) using the required return. 2. Determine the present value at time \( t = 0 \). *Note: The yellow boxes indicate where the solutions should be input.* ---
Transcribed Image Text:--- **Financial Calculation of Perpetuity** You are given the following timeline for cash flows (CFs), which occur at the end of each year: - **Years**: | 0 | 1 | 2 | 3 | 4 | 5 | ... | - **CF $s**: | 0 | 0 | 0 | 0 | 100 | 100 | 100 | This scenario describes a perpetuity that begins at the end of year 4. The required return rate is provided as 6.00%. **Tasks:** 1. Calculate the present value (PV) of the perpetuity at the end of year 3 (beginning of year 4) using the required return. 2. Determine the present value at time \( t = 0 \). *Note: The yellow boxes indicate where the solutions should be input.* ---
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