PVperpetuity= 4.50 / .08 = $56.25
This means that if the investor wants to earn an 8% rate of return, she should be willing to pay $56.25 for each share of this preferred stock.
f: Calculate an unknown variable, given the other relevant variables, in perpetuity problems.
Example:Continuing with our example from LOS 1.A.e, what rate of return would the investor make if she paid $75.00 per share for the stock?
I/Y = PMT / PVperpetuity
4.50 / 75.00 = 6.0%
g: Calculate the FV and PV of a series of uneven cash flows.
FV Example:Given: I = 9%; PMT1is $100; PMT2is $500; and PMT3is $900. How much is this future stream worth at the end of the 3rdyear?
Solve:enter PMT1=$100 as PV;I=9%n=2:Compute FV1=
$118.81
 enter PMT2=$500 as PV;I=9%n=1:Compute FV2=
$545.00
 enter PMT3=$900 as PV;I=9%n=0:Compute FV3=
$900.00
      Sum of FVs=
$1,563.81