Jed is considering the purchase of a unit investment trust


Jed is considering the purchase of a unit investment trust (UIT) with a three-year life. The UIT promises a payment of $5,000 next year and the payments are expected to grow at 8% per year for the subsequent two years. If Jed’s required return on the investment is 9.5%, what should he be willing to pay for the UIT? 

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Financial Management: Jed is considering the purchase of a unit investment trust
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