Download Practice Exercise: The Present Value of a Perpetuity

Survey
yes no Was this document useful for you?
   Thank you for your participation!

* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project

Document related concepts

Black–Scholes model wikipedia , lookup

Transcript 
Practice Exercise: The Present Value of a Perpetuity
Sales revenue for your division is expected to be $2 million p.a. indefinitely. What is the present
value of sales if the appropriate interest rate is 10% p.a.?
Answer to Practice Exercise: The Present Value of a Perpetuity
This problem can be represented in the form of a time line as follows:
Using the formula for the present value of a perpetuity yields:
PV 
a 2mm

 20mm.
i
0.10
Related documents
Section 11.3 Examples Example 1: Recall that a rational number is a
Section 11.3 Examples Example 1: Recall that a rational number is a
Corporate Finance
Corporate Finance
Chapter 5
Chapter 5
Lecture 3
Lecture 3
The Forms of Business Organization
The Forms of Business Organization
Portfolio-Construction-Management-and-Protection
Portfolio-Construction-Management-and-Protection
Tutorial 2 sol
Tutorial 2 sol
Document
Document
I. Why is there a time value to money (TVM)?
I. Why is there a time value to money (TVM)?
Problem Set 2
Problem Set 2