Determine the value of a $500 Canadian Pacific Limited perpetual 8 percent debenture if the required rate of return is 14%:

To determine the value of a Canadian Pacific Limited perpetual 8 percent debenture, we need to use the present value formula. The present value (PV) of a perpetuity is calculated by dividing the annual payment (or coupon) by the required rate of return (r).

In this case, the annual payment is 8% of $500, which is $40. The required rate of return is 14%.

The formula for the present value of a perpetuity is:

PV = Annual Payment / Required Rate of Return

Substituting the values into the formula:
PV = $40 / 0.14

Using a calculator, we can determine the present value:

PV = $40 / 0.14 = $285.71

Therefore, the value of the $500 Canadian Pacific Limited perpetual 8 percent debenture, with a required rate of return of 14%, is $285.71.