The present value of a perpetuity, with the first cash flow paid in 5 years’ time,...

The present value of a perpetuity, with the first cash flow paid in 5 years’ time, is equivalent to the present value of $150,000 that is to be paid in 14 years’ time. The perpetuity and the lump sum have a required rate of return of 10%. What is the annual cash flow associated with the perpetuity?

	a.	6,361.46
	b.	5,783.15
	c.	6,997.61
	d.	7697.37
	e.	None of above

Expert Solution

jeff jeffy answered 4 months ago

The present value of a perpetuity, with the first cash flow paid in 4 years time,...

The present value of a perpetuity, with the first cash flow paid in 4 years time, is equivalent to receiving $100,000 in 15 years time. The perpetuity and the lump sum are of equivalent risk and have a required rate of return of 10%. What is the annual cash flow associated with the perpetuity?

5. Present value To find the present value of a cash flow expected to be paid...

5. Present value To find the present value of a cash flow expected to be paid or received in the future, you will the future value cash flow by (1 + I)NN. What is the value today of a $12,000 cash flow expected to be received eight years from now based on an annual interest rate of 6%? $9,411 $6,023 $11,670 $7,529 Your broker called earlier today and offered you the opportunity to invest in a security. As a friend,...

The present value, today, of the terminal (perpetuity) value equity cash flow that begins in 7...

The present value, today, of the terminal (perpetuity) value equity cash flow that begins in 7 years is $6,700,000 assuming a cost of equity equal to 8%. The year 7 free cash flow (beginning of the growing perpetuity) is $550,000. What is the growth rate required for the continuation value (terminal value perpetuity) term? Use the mid-year discounting convention. A 2.83 b. 2.62% c. 3.14% d. 3.56%

The present value of a growing perpetuity, with cash flow C1 occurring one year from now,...

The present value of a growing perpetuity, with cash flow C1 occurring one year from now, is given by: [C1/(r - g)], where r > g. Group of answer choices True Fals

(Present value of a perpetuity) What is the present value of a $4,500 perpetuity discounted...

(Present value of a perpetuity) What is the present value of a $4,500 perpetuity discounted back to the present at 14 percent? The present value of the perpetuity is $(...)

The present value of a constant growth perpetuity is $100. If the perpetuity pays $5 next...

The present value of a constant growth perpetuity is $100. If the perpetuity pays $5 next year and the discount rate is 10%, by what rate is the perpetuity growing?

Consider a perpetuity with the first cash flow at the end of year 1. If the...

Consider a perpetuity with the first cash flow at the end of year 1. If the invested funds of the perpetuity could earn 11% per year and the perpetuity paid $467 per year, what is the present value of the perpetuity? (round to the nearest dollar)

What is the present value of a perpetuity of annual paymentswhere the first payment is...

What is the present value of a perpetuity of annual payments where the first payment is in one year and each payment is $4599.99?

eBook Problem 4-27 Present Value of a Perpetuity What is the present value of a perpetuity...

eBook Problem 4-27 Present Value of a Perpetuity What is the present value of a perpetuity of $400 per year if the appropriate discount rate is 10.92%? Round your answer to the nearest cent. $ If interest rates in general were to double and the appropriate discount rate rose to 21.84%, what would its present value be? Round your answer to the nearest cent. $

Calculate the present value of $1 million paid at the end of every year in perpetuity,...

Calculate the present value of $1 million paid at the end of every year in perpetuity, assuming a rate of return of 10% and a constant growth rate of 6%.

Question