Finance[growingperpetuity]  present value of a growing perpetuity

Calling Sequence


growingperpetuity(cash, rate, growth)


Parameters


cash



amount the perpetuity will pay one period from now

rate



interest rate

nperiods



growth rate in the payments





Description


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The function growingperpetuity computes the present value of a perpetuity paying the amount cash one period from now, with increasing payments at the end of each periods. The payments increase according to the growth rate.

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Since growingperpetuity used to be part of the (now deprecated) finance package, for compatibility with older worksheets, this command can also be called using finance[growingperpetuity]. However, it is recommended that you use the superseding package name, Finance, instead: Finance[growingperpetuity].



Compatibility


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The Finance[growingperpetuity] command was introduced in Maple 15.



Examples


I hold some shares of the XYZ company. I will receive dividends each year. The next dividend is expected to be 1.5 units per share, one year from now. The yearly dividends are expected to increase by 2% per year, for the foreseeable future What is the present value, per share, of the dividend payments, given that the discount rate is 11%?
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