Sep 1st, 2015
SoccerBoss
Category:
Price: \$5 USD

Question description

1. What is the present value of a perpetual stream of cash flows that pays \$70,000 at the end of year one and then grows at a rate of 5% per year indefinitely? The rate of interest used to discount the cash flows is 11%.

The present value of the growing perpetuity is \$

2. How much do you have to deposit today so that beginning 11 years from now you can withdraw \$10,000 a year for the next 5 years (periods 11 through 15) plus an additional amount of \$20,000 in the last year (period 15)? Assume an interest rate of 6 percent.

The amount of money you have to deposit today is \$

(Top Tutor) Daniel C.
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School: Boston College

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