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14
14.if the annual rate is 10% and the annual infinity (forever) payment is $1000, what is the present value of perpetuity?
Select one:
a. $15,000
b. $10,000
c. $5,000
d. $8,000
Expert Solution
Present value of the perpetuity=annual payment/annual rate
=1000/10%=$10,000 (Option b is correct)
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