Answered

At Westonci.ca, we make it easy for you to get the answers you need from a community of knowledgeable individuals. Experience the ease of finding quick and accurate answers to your questions from professionals on our platform. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals.

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

#SPJ4

We hope our answers were helpful. Return anytime for more information and answers to any other questions you may have. Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Thank you for trusting Westonci.ca. Don't forget to revisit us for more accurate and insightful answers.