An investment policy is offering $10,000 per year forever

Finance Jan 17, 2021

An investment policy is offering $10,000 per year forever. If the required return on this investment is 15 percent, how much will you pay for the policy? Select one: a.$66,667 $ b.$150,000 c.$156,667 d. $77,778

Expert Solution

Annuity = $10000

r = 15%

Hence, PV = A/r = 10000/15% = $66,666.67

Hence option a is correct

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