Assuming a 6% annual discount rate, what is the value of receiving $100.00 annually perpetually beginning next year?
A)$2,137.50
B)$1,000.00
C)$1,666.67
D)$1,333.33

Question

Quizplus · Accepted Answer

To calculate the present value of an annuity perpetuity, we can use the formula PV = (Annual payment / Discount rate).
In this case, the annual payment is $100. The discount rate is 6%. 
Therefore, PV = ($100 / 0.06) = $1,666.67.
The correct answer is C.

Assuming a 6% Annual Discount Rate, What Is the Value