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Chapter 4: Q11BP-b. (page 282)

If you invest $8,500 per period for the following number of periods, how much would you have? b. 50 years at 9 percent.

Short Answer

Expert verified

The investor would have $6,928,210.23 after 50 years.

Step by step solution

01

Identification of the required information

Payment (PMT) = $8,500

Period (n) = 50 year

Interest Rate (i) = 9%

02

Future value (FV)

FV=PMT脳1+in-1i=$8,500脳1+9%50-19%=$6,928,210.23

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Question:Ecology Labs Inc. will pay a dividend of \(6.40 per share in the next 12 months (D1). The required rate of return (Ke) is 14 percent and the constant growth rate is 5 percent.

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