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Unformatted text preview: appropriate discount rate for this risky perpetuity is 14%. What is the present value of this perpetuity? Perpetuity with supernormal growth: You are considering purchasing a perpetuity as an investment. The last cash flow was $1.00. The growth rate will be 25% from now until year 1, and then 20% from year 1 to year2. Following the year 2 cash flow, the growth rate will be 5% per year. What is the value of the perpetuity if the discount rate is 10%?...
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- Fall '08