Why do you think you have done something wrong? You have the answer (it’s A). I have no idea what all that stuff above is about calculator mode.
Joey, you’re going to confuse us all… chad17 Wrote: ------------------------------------------------------- > It’s B. This was in the Schweser sample exam. >
the perpetual growth model tells you what a dividend beginning one year from today will be worth indefinitely. so…(start at the bottom) 0 (x)/(1.0404)^3 1 (x)/(1.0404)^2 2 (x)/1.0404 3 (25,000/.0404) = x 4 25,000 dividends begin B
Oops - I see the point. The first scholarship is paid out exactly 4 years from today so the usual way to think about it would be that the perpetuity starts three years from today and the first scholarship is the first payemnt from the perpetuity.