The present value of a perpetuity that pays $F every year when the annual rate of discount is i is
A)F/(1 + i).
B)F×i.
C)F/i.
D)F + i.

Name: The present value of a perpetuity that pays $F every year when the annual rate of discount is i is A)F/(1 + i). B)F×i. C)F/i. D)F + i.
Brand: Quizplus
Rating: 4.9 (33 reviews)

Question

Quizplus · Accepted Answer

The present value of a perpetuity (an infinite series of payments) is calculated as the payment amount ($F) divided by the discount rate (i), which is represented by the formula F/i.

The Present Value of a Perpetuity That Pays $F Every