What is the present value of a perpetual stream of cash flow that pays $80,000 at the end of one year and grows at a rate of 5% indefinitely?
The rate of interest used to discount the cash flows is 10%. What is the present value of the growing perpetuity?
What is the present value of a $650 perpetuity discounted back to the present at 10%? What is the present value of the perpetuity?
How much do you have to deposit today so that, beginning 11 years from now, you can withdraw $9,000 a year for the next 8 years (periods 11 through 18) plus an additional amount of $18,000 in the last year (period 18)? Assume an interest rate of 6%.