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Given a discount rate of 13 ​percent, what is the present value of a perpetuity of...

Given a discount rate of 13 ​percent, what is the present value of a perpetuity of ​$1,400 per year if the first payment does not begin until the end of year​ 10?

Solutions

Expert Solution

Present value today = Perpetuity / Rate = $1,400 / 0.13 = $10,769.23

Present value = $10,769.23 / (1 + 0.13)^10

Present value = $3,172.49

jeff jeffy answered 2 years ago
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