Question

What must be the annual payment you receive in order to earn 6.3% rate of return on a perpetuity that has a price of $245.1? (Answer in $s to the nearest cent, i.E. Xx.Xx, with no $-sign or commas needed.)

Answer 1

the annual payment received is 15.44

Explanation:

The computation of the annual payment received is shown below:

As we know that

Perpetuity = Payment ÷ rate of return

$245.1 = Payment ÷ 6.3%

So, the payment is

= $245.1 × 6.3%

= 15.44

Hence, the annual payment received is 15.44

We simply apply the above formula so that the annual amount could come