What is the PV of an investment that will pay you $1,500 every year,forever,starting in one year's time,if the interest rate is 8%?

Question

Quizplus · Accepted Answer

The investment described is a perpetuity, which pays a fixed amount annually. The present value (PV) of a perpetuity can be calculated using the formula PV = C / r, where C is the annual payment and r is the interest rate. Here, C = $1,500 and r = 0.08 (8%). Thus, PV = $1,500 / 0.08 = $18,750.

What Is the PV of an Investment That Will Pay