An investment offers to pay $100 a year forever starting at the end of year 6. If the interest rate is 8%, what is the investment's value today?
Question
Solution 1
1. Break Down the Problem
To find the present value of an investment that pays $100 annually forever starting at the end of year 6, we will:
- Calculate the present value at year 5 (the time just before the first payment).
- Discount that present value back to today (year 0).
2. Relevant
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