Answered

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What is the price of a perpetuity that has a coupon of $55 per year and a yield to maturity of 2.5%? the price of the perpetuity is $?

Sagot :

The price of the perpetuity is $2200

What is price of the perpetuity?

The present value of a perpetuity is determined by simply dividing the amount of the regular cash flows by the discount rate. A growing perpetuity includes a growth rate that increases the cash flows received each period going forward.

Given:

coupon=$55

yield to maturity=2.5%

As, we know price of the perpetuity is determined by dividing the coupon by the yield to maturity.

So,

price=coupon/yield to maturity

price=$55/2.5%

price=$2200

Hence, the price of the perpetuity is $2200

Learn more about  price of the perpetuity  here:

https://brainly.com/question/17062204

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