What is the value of a perpetuity bond today that is expected to pay GHS65 of interest per year forever if the investor requires an annual return of 7

Finance Jan 14, 2021

What is the value of a perpetuity bond today that is expected to pay GHS65 of interest per year forever if the investor requires an annual return of 7.5 percent? What will be the value of the bond in two years? What if the interest payment was for 10 year?

Expert Solution

1.
=65/7.5%=866.666666666667

2.
=65/7.5%=866.666666666667

3.
=65/7.5%*(1-1/1.065^10)=404.970769215542

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