You have a chance to purchase a perpetual security that has a stated annual payment (cash flow) of R50.However, this is an unusual security in that the payment will increase at an annual rate of 5 percent per year; this increase is designed to help you keep up with inflation.The next payment to be received (your first payment, due in 1 year) will be R52.50.If your required rate of return is 15 percent, how much should you be willing to pay for this security?

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The Answer of You have a chance to purchase a perpetual security that has a stated annual payment (cash flow) of R50.However, this is an unusual security in that the payment will increase at an annual rate of 5 percent per year; this increase is designed to help you keep up with inflation.The next payment to be received (your first payment, due in 1 year) will be R52.50.If your required rate of return is 15 percent, how much should you be willing to pay for this security?

You Have a Chance to Purchase a Perpetual Security That