Question

Mo will receive a perpetuity of $27,000 per year forever, while Curly will receive the same annual payment for the next 40 years. If the interest rate is 7.1 percent, how much more are Mo's payments worth

Answer 1

380281.69-360900.85=19380.84

Step-by-step explanation:

Perpetuity present value, PV=A/rate

Ordinary Annuity present value, PV= A[(1-(1+7.1%)^40)/7.1%)]