You are to receive £75 per year indeﬁnitely.The market rate of interest for these types of payments is 8%.The price you would pay for this stream is:

Name: You are to receive £75 per year indeﬁnitely.The market rate of interest for these types of payments is 8%.The price you would pay for this stream is:
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The price of a perpetuity (indefinite stream of payments) is calculated by dividing the annual payment by the interest rate. Therefore, £75 / 0.08 = £937.50.

You Are to Receive £75 Per Year Indeﬁnitely