Question

Problem 5-68 Perpetuities and Effective Interest Rate (LO3) What is the value of a perpetuity that pays $100 every 3 months forever? The interest rate quoted on an APR basis is 6%.

Answer 1

The answer is $6666.67

Step-by-step explanation:

Quarterly interest rate = 0.06/4= 0.015

PV of Perpetuity = PMT/i= 100/0.015 = $6666.67