Given an interest rate of 9% per year, what is the value today of a perpetual st

Question

Given an interest rate of 9% per year, what is the value today of a perpetual stream of $2,000 annual ayments that begins in one year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g.. 32.16.) Perpetuity value Given an interest rate of 9% per year, what is the value today of a perpetual stream of S payments that begins today? (Do not round intermediate calculations and round your answer to 2 $ 22,222.22 2000 annual decimal places, e.g., 32.16.) Perpetuity value Given an interest rate of 4 9 percent per year what is the value at date t- 5 of a perpetual stream of $3 300 payments that begins at date 10? (Do not round intermediate calculations and round your answer to 2 decimal places, e.9-,32.16.) Perpetuity value Type here to search

Explanation / Answer

Answer 2.

Annual Payment = $2,000
Payment starts from today
Annual Interest Rate = 9%

Value of Perpetuity = Annual Payment * (1 + Interest Rate) / Interest Rate
Value of Perpetuity = $2,000 * 1.09 / 0.09
Value of Perpetuity = $2,180 / 0.09
Value of Perpetuity = $24,222.22

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