What is the present value of a $1,100 payment made every year forever when interest rates are 4.5 percent?
A) $11,100
B) $21,089.37
C) $22,963.14
D) $24,444.44

Question

Quizplus · Accepted Answer

The present value of a perpetuity is calculated using the formula PV = P / r, where P is the payment amount and r is the interest rate (expressed as a decimal). Here, P = $1,100 and r = 4.5% or 0.045. So, PV = $1,100 / 0.045 = $24,444.44.

What Is the Present Value of a $1,100 Payment Made