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- This topic has 1 reply, 2 voices, and was last updated 2 months ago by John Moffat.
- January 18, 2023 at 4:51 pm #676926sindParticipant
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A company receives a perpetuity of $20,000 per year in arrears, and pays 30% corporation tax 12 months after the end of the year to which the cashflows relate. At a cost of capital of10%, what is the after-tax present value of the perpetuity?
I got the wrong answer $140,000
AWCo needs to have $100,000 working capital in place immediately for the start of a2-year project. The amount will stay constant in real terms. Inflation is running at 10% per year, and AWCo’s money cost of capital is12%. What is the present value of the cashflows relating to working capital?
I tried to do this question. but I’m not getting the answer
AMCo wil lreceive a perpetuity starting in 2years ‘time of $10,000 per year, increasing by the rate of inflation(which is 2%).What is the present value of this perpetuity assuming a money cost of capital of 10.2%?
This one also I find it tough to answer. I don’t understand the solution given in the kitJanuary 19, 2023 at 10:16 am #677021John MoffatKeymaster
- Topics: 56
- Replies: 51874
Have you watched my free lectures on all of this, because I do explain all. of these situations.
If you type out your workings then I will explain where you have gone wrong.
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