A friend who owns a perpetuity that promises to pay $1,000 at the end of each year,forever,comes to you and offers to sell you all of the payments to be received after the 25th year for a price of $1,000.At an interest rate of 10 percent,should you pay the $1,000 today to receive payment numbers 26 and onwards?
What does this suggest to you about the value of perpetual payments?

Question

A friend who owns a perpetuity that promises to pay $1,000 at the end of each year,forever,comes to you and offers to sell you all of the payments to be received after the 25th year for a price of $1,000.At an interest rate of 10 percent,should you pay the $1,000 today to receive payment numbers 26 and onwards?
 What does this suggest to you about the value of perpetual payments?

Quizplus · Accepted Answer

The Answer of A friend who owns a perpetuity that promises to pay $1,000 at the end of each year,forever,comes to you and offers to sell you all of the payments to be received after the 25th year for a price of $1,000.At an interest rate of 10 percent,should you pay the $1,000 today to receive payment numbers 26 and onwards?
 What does this suggest to you about the value of perpetual payments?

A Friend Who Owns a Perpetuity That Promises to Pay