You are to receive $75 per year indefinitely. The market rate of interest for these types of payments is 8%. The price you would pay for this stream is:

Name: You are to receive $75 per year indefinitely. The market rate of interest for these types of payments is 8%. The price you would pay for this stream is:
Brand: Quizplus
Rating: 4.8 (44 reviews)

Question

Quizplus · Accepted Answer

The price of a perpetuity is calculated using the formula: Price = Payment / Interest Rate. Here, $75 / 0.08 = $937.50.

You Are to Receive $75 Per Year Indefinitely