Calculate the present value of a perpetuity that pays $10,000 annually (at the startof each year) forever. The interest rate is 8%
Question
Solution 1
The formula for the present value of a perpetuity is:
PV = C / r
where:
- PV is the present value
- C is the cash flow per period (in this case, the annual payment)
- r is the interest rate
Given that C = $10,000 and r = 8% or 0.08, we can substitute these values into the formula:
PV = $10,000 / Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study prob
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solv
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