What is the present value of a constant perpetuity of 25 per year where the required...

What is the present value of a constant perpetuity of 25 per year where the required rate of return is 5%?

Expert Solution

Present value of perpetuity = annual cash flows / required rate of return

here,

annal cash flows = 25

required rate of return =5%=>0.05.

present value of perpetuity = 25/0.05

=>500.

jeff jeffy answered 2 years ago

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