What is the present value of an investment with 10% annual compounding and a payment of...

What is the present value of an investment with 10% annual compounding and a payment of $250 at the end of each year forever?

Expert Solution

Calculation of the present value of the annuity:

Formula,

Present value of perpetuity = Annual cash flow / Annual Rate

= $250 / 10%

= $2,500 (Answer)

So, the present value of the annuity is $2,500.

jeff jeffy answered 2 years ago

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