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find out the following (assume all payments are made at the end of the year)

a. What is the value today of a $10,000 payment made in perpetuity assuming a 8% discount rate?

b. Assume the same perpetuity as above but the payments will not begin for another five years. What is the present value of such a perpetuity?

c. What is the present value of a 5 year annuity which pays $10,000 per year and with an interest rate of 8%?

D. You are told you will receive the following cash payments at the end of the next three years:

Year 1: $10,000
Year 2: $25,000
Year 3: $50,000

Assuming a discount rate of 12%, what is present value of all payments?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M946369

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