If the annual interest rate is i,the present value of $X to be received at the end of each future year forever is: A) $X/(1 + i). B) $X/i. C) $X/(1 + i)ⁿ. D) $X/i ⁿ. E) $Xⁿ/i ⁿ.

Question

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The present value of $X to be received at the end of each future year forever, known as a perpetuity, is calculated as $X divided by the annual interest rate i, which is represented by the formula $X/i.

If the Annual Interest Rate Is I,the Present Value of $X