Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 3, Problem 18P
To determine

Calculate the growth rate.

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You are willing to pay $15,625 now to purchase a perpetuity which will pay you and your heirs $1,350 each year, forever, starting at the end of this year. If you're required rate of return does not change, how much would you be willing to pay if this were a 20-year, annual payment, ordinary annuity instead of a perpetuity?
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