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ddd [48]
2 years ago
14

3) Tobi owns a perpetuity that will pay $1,500 a year, starting one year from now. He offers to sell you all of the remaining pa

yments after the next 25 payments have been paid. (A) What price should you offer him for payments 26 onward if you desire a rate of return of 8 percent
Business
1 answer:
Lesechka [4]2 years ago
5 0

Answer:

you should pay up to $2,737.84 to Tobi

Explanation:

first, the terminal price of the perpetuity must be determined = annual payment / r = $1,500 / .08 = $18,750

now, the present day value of the future terminal value

present value = future value / (1 + r)ⁿ = $18,750 / (1 + 8%)²⁵ = $2,737.84

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Answer:

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Explanation:

The computation of the value of the quick ratio is shown below:

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