If the interest rate is 10 percent,the present value of an annual payment of $100,000 to be received indefinitely is _____

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Quizplus · Accepted Answer

The present value of an annual payment of $100,000 to be received indefinitely (a perpetuity) is calculated using the formula PV = PMT / i, where PV is the present value, PMT is the annual payment, and i is the interest rate. Here, PMT = $100,000 and i = 10% or 0.10. Thus, PV = $100,000 / 0.10 = $1,000,000.

If the Interest Rate Is 10 Percent,the Present Value of an Annual