If a perpetuity has a price of $500 and an annual interest payment of $25,the interest rate is
A)2.5 percent.
B)5 percent.
C)7.5 percent.
D)10 percent.

Question

Quizplus · Accepted Answer

The interest rate can be calculated as the annual interest payment divided by the price of the perpetuity, multiplied by 100 to convert to a percentage:

$25/$500 x 100 = 5%

Therefore, the correct answer is choice B.

If a Perpetuity Has a Price of $500 and an Annual