What is the most you would be willing to pay for a promise to pay you $10 per year forever, beginning next year, if your opportunity cost of capital is a constant 10%?

Name: What is the most you would be willing to pay for a promise to pay you $10 per year forever, beginning next year, if your opportunity cost of capital is a constant 10%?
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Quizplus · Accepted Answer

The value of a perpetuity is calculated as the annual payment divided by the discount rate. Here, $10 / 0.10 = $100.

What Is the Most You Would Be Willing to Pay