If we assume a perpetuity pays $10 per year forever. What would the perpetuity be worth...

Question

Question

If we assume a perpetuity pays $10 per year forever. What would the perpetuity be worth if the required rate of return is 10%?

$5

$100

$500

$1,000

business finance

Answer 1

Answer #1

Value of Perpetuity = Annual Payment / Discount Rate

= $10 / 10%

Value of Perpetuity = $100

Option B is correct.

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Answer 2

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