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An insurance company is offering depositors a perpetual cash flow if they depos…

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Wize University Introduction to Finance Textbook > Time Value of Money

Perpetuities

3 Activities

An insurance company is offering depositors a perpetual cash flow if they deposit $1,000,000 today. At a discount rate of 7%, how much of an annual cash flow can the insurance company pay the investor?
More Perpetuities Questions:
With interest at 9% compounded monthly, how much money is required today to provide perpetual income of $14,352.46 per year?
Round your work discount rate to at least 6 decimal places. Round final answer to 2 decimal places.
With interest at 8% compounded annually, how much money is required today to provide perpetual income of $14,316 per year?
What is the PV of a perpetuity of $100 at an interest rate of 6%?
You are offered the right to receive $6,000 per year forever, starting in one year. If your discount rate is 7%, what is this offer worth to you?
An investment will pay you $600 per month starting today, what is the present value using an effective daily rate of 0.1%.
Round your discount rate to at least 6 decimal places.
You have just won a lottery that will pay you $1,000 per week forever starting today. Using a discount rate of 8% compounded monthly, what is the minimum lump sum payment you should accept in exchange for your winning ticket?
Round your discount rate to at least 6 decimal places.
You have just won a lottery that will pay you $1,000 per week forever starting one week from today. Using a discount rate of 8% compounded monthly, what is the minimum lump sum payment you should accept in exchange for your winning ticket?
Round your discount rate to at least 6 decimal places.
An investment you made will begin paying you $1,000 per year forever, starting in one year. If your discount rate is 10% per year, what is the present value of your investment?
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 per year forever.
You have just purchased a stock that will pay you dividends of $1.60 per month forever starting one month from today. If your expected return is 7% compounded annually, how much did you pay for the stock? Round your final answer to 2 decimal places.
An investment is valued at $821.94 today and promises to make annual payments at the end of each year forever. If the discount rate is 9.8% per year, how much will this investment pay each year? Round your final answer to 2 decimal places.
An investment promises to pay $100 at the end of each year forever. If the discount rate is 6% what is the present value? Round final answer to 2 decimal places.