What's the rate of return you would earn if you paid $950 for a perpetuity that pays $85 per year?
A)8.95%
B)9.39%
C)9.86%
D)10.36%
E)10.88%

Question

​What's the rate of return you would earn if you paid $950 for a perpetuity that pays $85 per year?
A)​8.95%
B)​9.39%
C)​9.86%
D)​10.36%
E)​10.88%

Quizplus · Accepted Answer

The rate of return is calculated by dividing the annual payment by the purchase price. In this case, the annual payment is $85 and the purchase price is $950, so the rate of return is $85/$950 = 8.95%.

​What's the Rate of Return You Would Earn If You

What's the Rate of Return You Would Earn If You