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Homework answers / question archive / The present value of a perpetuity can be determined by: Multiplying the payment by the interest rate Dividing the interest rate by the payment Multiplying the payment by the number of payments to be made
The present value of a perpetuity can be determined by: Multiplying the payment by the interest rate Dividing the interest rate by the payment Multiplying the payment by the number of payments to be made
Answer
D Dividing
Explanation
The formula for calculation of Present Value of a Perpetuity is as follows:
Present Value of Perpetuity = Cash Flows / Interest Rate
So, the correct option is 2nd "Dividing the interest rate by payment".
