Answered

44. What's the present value of a perpetuity that pays $250 per year if the appropriate interest rate is 5%?

Answer :

Ritmeks

Answer:

$5,000

Explanation:

A perpetuity pays $250 every year

The appropriate interest rate is 5%

= 5/100

= 0.05

Therefore the present value of the perpetuity can be calculated as follows

= 250/0.05

= $5,000

Hence the present value of the perpetuity is $5,000

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