A perpetuity of $3000 per year beginning paying a year from today offers an 9% return....

Question

Question

A perpetuity of $3000 per year beginning paying a year from today offers an 9% return. What is its present value?

business finance

Answer 1

Answer #1

Present value fo perpetuity = Periodic income / Rate of interest of that period

Periodic income = $3,000

Rate of interest = 9%

Therefore, PV = $3000 / 9% = $33,333.33

Present value of the perpetuity is $33,333.33

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Answer 2

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