Suppose a program has 0 initial costs and provides a net benefit of $10 every year forever.If the discount rate is 3%, approximately what is the present value of the program?
A)$10.30
B)$333.33
C)$1,000
D)∞

Question

Quizplus · Accepted Answer

The present value of a perpetuity (a payment that occurs indefinitely) is calculated using the formula PV = P / r, where P is the payment per period and r is the discount rate. Here, P = $10 and r = 0.03 (3%), so PV = $10 / 0.03 = $333.33.

Suppose a Program Has 0 Initial Costs and Provides a Net