contestada

What is the present value of a growing perpetuity that makes a payment of $100 in the first year, which thereafter grows at 3% per year

Respuesta :

Answer:

present value  = $2500

Explanation:

given data

Dividend D = $100

grows g = 3% per year

solution

we consider here discount rate that is ke = 7%

so now we apply here present value  formula that is

present value  = [tex]\frac{D}{ke-g}[/tex]    ..............................1

put here value and we will get

present value  = [tex]\frac{100}{0.07-0.03}[/tex]

solve it and we will get

present value  = $2500

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