Solve the problem.
-The perpetual annual rent for a property is $35,000. Find the capital value at 4% compounded continuously.
A) $98,500
B) $985,000
C) $875,000
D) $36,400

Question

Quizplus · Accepted Answer

The formula for finding the present value (capital value) of a perpetual annuity is:

PV = R / r

Where PV is the present value, R is the yearly rent or payment, and r is the interest rate.

Plugging in the given values, we get:

PV = 35,000 / 0.04 = $875,000

Therefore, the answer is choice C, $875,000.

Solve the Problem. -The Perpetual Annual Rent for a Property Is $35,000. Find