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What's the present value, when interest rates are 7.5 percent, of a $170 payment made every year forever
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What's the present value, when interest rates are 7.5 percent, of a $170 payment made every year forever

User Brent Friar
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1 Answer

2 votes

Answer:

The present value of the perpetual annuity is $2,266.67.

Step-by-step explanation:

Giving the following information:

Interest rate (i)= 7.5% = 0.075

Cash flows= $170

To calculate the present value (PV) of this perpetual annuity, we need to use the following formula:

PV= Cf/ (i)

PV= 170 / 0.075

PV= $2,266.67

The present value of the perpetual annuity is $2,266.67.

User George Alexandria
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