Present Value of a Perpetuity What is the present value,when interest rates are 10 percent,of a $75 payment made every year forever?
A)$6.75
B)$675.00
C)$750.00
D)$1,000.00

Question

Quizplus · Accepted Answer

The present value (PV) of a perpetuity is calculated using the formula:

PV = Payment/Interest rate

In this case, the payment is $75 and the interest rate is 10%, so:

PV = $75/0.10 = $750

Therefore, the present value of the perpetuity is $750, so the correct answer is choice C.

Present Value of a Perpetuity What Is the Present Value,when