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Atlas just won a lottery and has been offered two prizes, he must choose one. …

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Wize University Introduction to Finance Textbook > Time Value of Money

Growing Perpetuities

3 Activities

Atlas just won a lottery and has been offered two prizes, he must choose one.

  • Option 1: Take a lump sum of $4,000,000 today.
  • Option 2: Receive $450,000 at the end of the year and 5% more per year forever.
Assuming a discount rate of 15% compounded semi-annually, which option should Atlas choose?
More Growing Perpetuities Questions:
An investment will pay you $500 today and 5% more each quarter forever. What is the present value of this investment if your opportunity cost is 25% compounded monthly.
Round your work to at least 6 decimal places and final answers to 2 decimal places.
What is the present value of an investment that will pay you $500 in one year, and 5% more each year indefinitely. The appropriate discount rate is 17% compounded daily.
An investment will pay you $500 today and 8% more each year. What is the value of this investment if your discount rate is 12%?
An investment will pay you $500 today and 8% more per year indefinitely. At a discount rate of 12%, what is the present value of this investment?
An investment will pay you $500 in one year and 8% more per year indefinitely. At a discount rate of 12%, what is the present value of this investment?