In: Finance
What is the value today of receiving $2,562.00 per year forever? Assume the first payment is made next year and the discount rate is 7.00%.
Answer format: Currency: Round to: 2 decimal places.
What is the value today of receiving $2,197.00 per year forever? Assume the first payment is made 8.00 years from today and the discount rate is 13.00%.
Answer format: Currency: Round to: 2 decimal places.
1)
Value today = Next year payment / required rate
Value today = 2,562,000 / 0.07
Value today = $36,600,000.00
7)
Value at year 7 = Payments / required rate
Value at year 7 = 2197 / 0.13
Value at year 7 = 16,900
Value today = Future value / (1 + r)^n
Value today = 16,900 / (1 + 0.13)^7
Value today = 16,900 / 2.352605
Value today = $7,183.53