Revision as of 20:26, 18 November 2023 by Admin (Created page with "'''Solution: B''' Split this into three perpetuities with payments 3 years apart. Find the three-year interest rate: <math>1.125=(1+j)^{\frac{1}{3}}, j=0.423828</math>. The present value of the three perpetuities, starting at times 0,1 , and 2 is: <math display="block"> \begin{aligned} & \frac{100(1.423828)}{0.423828}+\frac{X(1.423828)}{0.423828(1.125)}+\frac{100(1.423828)}{0.423828(1.125)^2}=9450 \\ & X=2963.19 \end{aligned} </math> {{soacopyright | 2023 }}")
Exercise
ABy Admin
Nov 18'23
Answer
Solution: B
Split this into three perpetuities with payments 3 years apart. Find the three-year interest rate: [math]1.125=(1+j)^{\frac{1}{3}}, j=0.423828[/math].
The present value of the three perpetuities, starting at times 0,1 , and 2 is:
[[math]]
\begin{aligned}
& \frac{100(1.423828)}{0.423828}+\frac{X(1.423828)}{0.423828(1.125)}+\frac{100(1.423828)}{0.423828(1.125)^2}=9450 \\
& X=2963.19
\end{aligned}
[[/math]]
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