The value today of a perpetuity with an annual, year-end payments of $500 each and an expected annual rate of return equal to 1% is closest to:
A) $5
B) $500
C) $5,000
D) $50,000

Name: The value today of a perpetuity with an annual, year-end payments of $500 each and an expected annual rate of return equal to 1% is closest to: A) $5 B) $500 C) $5,000 D) $50,000
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Quizplus · Accepted Answer

The value of a perpetuity is calculated as the payment amount divided by the interest rate. Here, $500 / 0.01 = $50,000.

The Value Today of a Perpetuity with an Annual, Year-End