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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
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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

User Henry Vonfire
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1 Answer

4 votes
4 votes

Answer:

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%)]

User DigitalWestie
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