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Calculate the present value of perpetuity payment stream of 30000 per month at annual rate 15%?
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Calculate the present value of perpetuity payment stream of 30000 per ...
To calculate the present value of a perpetuity payment stream, we can use the formula for present value (PV) of a perpetuity:
Present Value of Perpetuity Formula
The formula is:
PV = C / r
Where:
- PV = Present Value
- C = Cash flow per period
- r = Discount rate per period
Given Values
- Monthly cash flow (C) = 30,000
- Annual discount rate = 15%
Conversion of Annual Rate to Monthly Rate
To apply the formula, we need to convert the annual rate to a monthly rate:
- Monthly rate (r) = 15% / 12 = 1.25% = 0.0125
Calculation of Present Value
Now we can substitute the values into the formula:
PV = 30,000 / 0.0125
Performing the Calculation
- PV = 30,000 / 0.0125
- PV = 2,400,000
Conclusion
The present value of a perpetuity payment stream of 30,000 per month at an annual rate of 15% is **2,400,000**.
This means that if you were to invest 2,400,000 today at an annual rate of 15%, you would receive a perpetual monthly payment of 30,000.
Present Value of Perpetuity Formula
The formula is:
PV = C / r
Where:
- PV = Present Value
- C = Cash flow per period
- r = Discount rate per period
Given Values
- Monthly cash flow (C) = 30,000
- Annual discount rate = 15%
Conversion of Annual Rate to Monthly Rate
To apply the formula, we need to convert the annual rate to a monthly rate:
- Monthly rate (r) = 15% / 12 = 1.25% = 0.0125
Calculation of Present Value
Now we can substitute the values into the formula:
PV = 30,000 / 0.0125
Performing the Calculation
- PV = 30,000 / 0.0125
- PV = 2,400,000
Conclusion
The present value of a perpetuity payment stream of 30,000 per month at an annual rate of 15% is **2,400,000**.
This means that if you were to invest 2,400,000 today at an annual rate of 15%, you would receive a perpetual monthly payment of 30,000.
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Calculate the present value of perpetuity payment stream of 30000 per month at annual rate 15%?
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Calculate the present value of perpetuity payment stream of 30000 per month at annual rate 15%? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Calculate the present value of perpetuity payment stream of 30000 per month at annual rate 15%? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Calculate the present value of perpetuity payment stream of 30000 per month at annual rate 15%?.
Calculate the present value of perpetuity payment stream of 30000 per month at annual rate 15%? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Calculate the present value of perpetuity payment stream of 30000 per month at annual rate 15%? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Calculate the present value of perpetuity payment stream of 30000 per month at annual rate 15%?.
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