You will receive a R100 annual perpetuity, the first payment to be received now, at Year 0, a R300 annual perpetuity payable starting at the end of Year 5, and a R200 semi-annual (2 payments per year) perpetuity payable starting midway through Year 10.If you require an effective annual interest rate of 14.49 percent, what is the present value of all three perpetuities together at Year 0? (Hint: The semi-annual annuity can be thought of as two annual annuities.)
A) R2,091.86
B) R2,785.14
C) R4,213.51
D) Infinite; the present value of any perpetuity is infinite.
E) Cannot determine the value since some payments are annually and some semi-annually.
Correct Answer:
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