The ____ of a perpetual stream of equal, annual returns (PMT) discounted at i% per year is equal to ____.
A) present value; PMT/i
B) present value; PMT × i
C) future value; PMT/i
D) future value; PMT × i

Question

Quizplus · Accepted Answer

The question states that we are looking for the present value of a perpetual stream of equal, annual returns (PMT) discounted at i% per year. This means we are trying to find the current value of an infinite series of equal payments that will continue forever. Using the formula for the present value of an annuity, which is PMT/i, we can find the answer. Therefore, the correct option is A.

The ____ of a Perpetual Stream of Equal, Annual Returns