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?

Expert Solution

Growth rate = Ke - (D1 / P0)

= 10% - ($5 / $100)

= 10% - 5%

= 5%

Growth rate = 5%

jeff jeffy answered 2 years ago

what is the present value of a perpetuity that pays $8.50 per year forever (at the...

what is the present value of a perpetuity that pays $8.50 per year forever (at the end of every year) if the appropriate discount rate is 7%

$15,000 is the present value of Perpetuity A which pays $500 at the beginning of each...

$15,000 is the present value of Perpetuity A which pays $500 at the beginning of each year with the first payment starting today. $6,834 is the present value of Perpetuity B which pays $550 at the beginning of each year, with the first payment starting n years from today. Determine the present value of an annuity-due that makes payments of $55 each year for n years.

(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 $(...)

What is the present value of a constant perpetuity of 25 per year where the required...

What is the present value of a constant perpetuity of 25 per year where the required rate of return is 5%?

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. $

Urgently required. What is the present value (PV) today of a stable perpetuity that pays $11,000...

Urgently required. What is the present value (PV) today of a stable perpetuity that pays $11,000 every 3 years, starting 7 years from today? The appropriate annual discount rate is 12% p.a. Round your answer to the nearest dollar. Do not include the $ symbol nor the separating comma, if any Thus, for example, if the PV is $24,323 55 write 24324 in the answer box. IMPORTANT. Use at least 4 decimals in all your intermediate calculations In the case...

Question 1 Part A What’s the present value of a perpetuity that pays $3000 per year...

Question 1 Part A What’s the present value of a perpetuity that pays $3000 per year if the appropriate interest rate is 8%? Part B You set up a college fund in which you pay $3000 each year at the end of the year. How much money will you have accumulated in the fund after 8 years, if your fund earns 15% compounded annually? Part C What is the effective annual rate (EAR) of 6% compounded monthly? Part D Your...

Perpetuity A pays $100 at the end of each year. Perpetuity B pays $25 at the end of each quarter.

Perpetuity A pays $100 at the end of each year. Perpetuity B pays $25 at the end of each quarter. The present value of perpetuity A at the effective rate of interest is $2,000. What is the present value of perpetuity B at the same annual effective rate of interest i?

Explain why we can use the present value of a no-growth perpetuity to quickly estimate the...

Explain why we can use the present value of a no-growth perpetuity to quickly estimate the value of a relatively long-lived, no-growth financial asset. Make sure you provide a mathematical example.

What is the present value of $1 billion paid at the end of every year in perpetuity, assuming a rate of return of 10% and a constant growth rate of 4%?

Question