A perpetuity of $5,000 per year beginning today offers a 15% return. What is its present...

Question

Question

A perpetuity of $5,000 per year beginning today offers a 15% return. What is its present value?

Multiple Choice

$33,333.33

$37,681.16

$65,217.39

$38,333.33

Answer 1

Answer #1

Present value of perpetuity paid at beginning is

= C(1+r)/r

Where c is periodic payment

R is rate

Pv = 5000(1.15)/15% =38333.33

Option 1 is correct

Answer 2

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