The discussion revolves around calculating the present value of a perpetuity with increasing payments made semiannually. The payments start at 5 and increase over time, with specific amounts outlined for each period. The nominal interest rate is given as 8% convertible semiannually.
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sstark said:Consider a perpetuity, which makes payments twice a year. The first year payments are
5 at time 0.5 (years) and 5 at time 1, next year they are 10 at time 1.5 and 10 at time 2, in
the third year the payments are 15.
sstark said:Consider a perpetuity, which makes payments twice a year. The first year payments are
5 at time 0.5 (years) and 5 at time 1, next year they are 10 at time 1.5 and 10 at time 2, in
the third year the payments are 15 at time 2.5 and 15 at time 3, and so on. The annual
interest rate is 8% nominal convertible semiannually. Find the present value of this
perpetuity