You have the opportunity to buy a perpetuity which pays $1,000 annually. Your required rate of return on this investment is 15 percent. You should be essentially indifferent to buying or not buying the investment if it were offered at a price of:
A) $5,000.00
B) $6,000.00
C) $6,666.67
D) $7,500.00
E) $8,728.50
C
You might also like to view...
Which of the following statements is true?
A. If the Fed wants to decrease money supply, it sells government securities. B. If the Fed wants to increase money supply, it sells government securities. C. If the Fed wants to decrease money demand, it sells government securities. D. If the Fed wants to increase money demand, it sells government securities.
The Environmental Quality Assessment Report is the document required under the National
Environmental Policy Act to assess environmental impacts of government actions. Indicate whether the statement is true or false
Why do many brands with a large market share spend proportionally less on advertising compared to brands with small market share?
A. Beyond a certain volume of promotion, diminishing returns set in. B. Certain industries have a practice of spending a low amount of dollars, relative to sales, on advertising. C. There is no minimum level of exposure for advertising to have an effect on sales. D. Advertising will not stimulate economic growth for the industry. E. The firms with large market share do not have to advertise anymore.
What does the following mathematical expression yield? (total market value of all securities - liabilities) divided by (total shares outstanding) =
A) asset value. B) net value. C) net asset value. D) net return value. E) asset return value.