A project yields an annual benefit of $25 a year, starting next year and continuing forever....

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A project yields an annual benefit of $25 a year, starting next year and continuing forever....

A project yields an annual benefit of $25 a year, starting next year and continuing forever. What is the present value of the benefits if the interest rate is 10%?

business economics

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Answer 1

Answer #1

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the project is a forever series.

The present value of forever series =A/i

A=Annual benefit

i=interest rate

PV=25/0.1=$250

The present value of the series is $250

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Answer 2

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A project yields an annual benefit of $25 a year, starting next year and continuing forever....

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