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If you are willing to pay $26,549.00 today to receive a perpetuity with the first payment...

If you are willing to pay $26,549.00 today to receive a perpetuity with the first payment occurring next year then the payment must be $______. Assume a 14.00% discount rate.

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Answer #1

Current value of perpetuity=Annual payments/discount rate

26549=Annual payments/0.14

Hence Annual payments=(26549*0.14)

which is equal to

=$3716.86

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