Hey everyone. I am on the quant section. There is a question that states an investment was purchased for 25000 the person will get 5000 per year in perpetuity and the required return is 15% what is the money weighted avg. When I put it into my BAII I did the regualr IRR equation. But the last line of the calc equation it tells me to put in 500 (enter)(IRR)(CPT) Where the heck does the 500 come from? For anyone using the HP the value they have you type in is 99. Do these numbers mean infinity? Thanks so much!!
IRR = 5000/25000=20% //not sure how to use the calculator
aapl, yes, your thinking is correct. they put 500 and 99 just to “simulate” the perpetuity going out forever. martikus’ way is easier.
Great thanks so much for the quick feedback!!
and yea martikus WAY easier thanks