What is the value today of a $7,500 payment made in perpetuity assuming a 12% discount rate?
Subject: Business / Finance
Question
What is the value today of a $7,500 payment made in perpetuity assuming a 12% discount rate?
Save your time!
- Proper editing and formatting
- Free revision, title page, and bibliography
- Flexible prices and money-back guarantee
Assume the same perpetuity as above but the payments will not begin for another five years. What is the present value, today, of such a perpetuity?
Use the PV function within Excel to calculate the present value of a 5 year annuity which pays $7,500 per year (starting next year) and with an interest rate of 12%? (Note, as a check, your answer in part (a) minus your answer in part (b) should equal your answer in part (c).
