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

Accounting May 02, 2021

Expert Solution

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".

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