The difference in present value between a perpetuity that promised $1 per year starting today and one that promised $1 per year starting next year is
A)0.
B)$1.
C)$1/(1 + r).
D)$r/(1 + r).

Name: The difference in present value between a perpetuity that promised $1 per year starting today and one that promised $1 per year starting next year is A)0. B)$1. C)$1/(1 + r). D)$r/(1 + r).
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Question

Quizplus · Accepted Answer

The difference is simply the value of the $1 received today, which is not discounted, hence $1.

The Difference in Present Value Between a Perpetuity That Promised