Sid Phillips has funded a retirement investment with $250,000 earning a return of 6.75 percent annually. What is the value of the payment that he can receive in perpetuity? (Round to the nearest dollar.)

Question

Quizplus · Accepted Answer

The value of the perpetuity payment can be found by dividing the annual interest earned by the rate of return. In this case, 6.75% of $250,000 is $16,875. Thus, Sid Phillips can receive perpetuity payments of $16,875 per year.

Sid Phillips Has Funded a Retirement Investment with $250,000 Earning